Tag: EMV

How much would Chang benefit if she knew for certain that the Olympic organization would guarantee her the contract? (This guarantee would be in force only if she were successful in developing the product.) Assume p1 = 0.4, p2 = 0.8, and p3 = 0.1

Business Analytics: Uncertainty

Develop a decision tree that can be used to solve Chang’s problem. You can assume in this part of the problem
that she is using EMV (of her net profit) as a decision criterion. Build the tree so that she can enter any values
for p1, p2, and p3 (in input cells) and automatically see her optimal EMV and optimal strategy from the tree.

If p2 = 0.8 and p3 = 0.1, what value of p1 makes Chang indifferent between abandoning the project and going
ahead with it?

How much would Chang benefit if she knew for certain that the Olympic organization would guarantee her the
contract? (This guarantee would be in force only if she were successful in developing the product.) Assume p1 =
0.4, p2 = 0.8, and p3 = 0.1

Suppose now that this is a relatively big project for Chang. Therefore, she decides to use expected utility as her
criterion, with an exponential utility function. Using some trial and error, see which risk tolerance changes her
initial decision from “go ahead” to “abandon” when p1 = 0.4, p2 = 0.8, and p3 = 0.1.

Develop a decision tree using the most appropriate support tool as described in Part a.

Calculate the value of p1 as described in Part b. Show calculations.

Calculate the possible profit using the most appropriate support tool as described in Part c. Show calculations.

Calculate risk tolerance as described in Part d. Show calculations.

Summarize the approach for developing risk response strategies. For example, which risks will you first attempt to avoid? Will you do it based on the risk factor score (P I) or on EMV?

Responding to risk wk6dy7

Summarize the approach for developing risk response strategies. For example, which risks will you first attempt to avoid? Will you do it based on the risk factor score (P I) or on EMV?

Describe the process you will use to determine risk triggers (the event that tells you that the risk event is imminent).

Document the risk triggers in the project risk register in Column G.

Document risk response strategies (plans) for each risk in the project risk register in Columns L–M. The risk response strategies should be derived from the eight strategies from the PMBOK (PMBOK® Guide).