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fa272
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A County is considering whether to build a levee along the river bank as a flood control system. The two alternative solutions are:
1 A 5foot high levee costing $ 10000000, and
2 a 10foot high levee costing $25000000
Both levees would have a useful life of 100 years. Historical records indicates that there is a 10% chance that the river will rise between 2 ft and 10ft, and a 2% chance that it will rise over 10ft. Any flood caused by river rising more than 2 ft in the absence of a levee or overflowing the levee is estimated to cause $ 200000000 in property damage.
A Which option has the least expected cost? Note: having no levee is also for consideration.
B Property damage in monetary term is not the only criterion for decision making. Suppose this county could consider the utility of property damage as a function of the payoff cost as indicated in the equation below , what should its decision be ?
Utility function: U=1 (1/50625)*Xˆ2
Where X is the pay – off cost to the County.
 2 years ago
 2 years ago
fa272 Group Title
A County is considering whether to build a levee along the river bank as a flood control system. The two alternative solutions are: 1 A 5foot high levee costing $ 10000000, and 2 a 10foot high levee costing $25000000 Both levees would have a useful life of 100 years. Historical records indicates that there is a 10% chance that the river will rise between 2 ft and 10ft, and a 2% chance that it will rise over 10ft. Any flood caused by river rising more than 2 ft in the absence of a levee or overflowing the levee is estimated to cause $ 200000000 in property damage. A Which option has the least expected cost? Note: having no levee is also for consideration. B Property damage in monetary term is not the only criterion for decision making. Suppose this county could consider the utility of property damage as a function of the payoff cost as indicated in the equation below , what should its decision be ? Utility function: U=1 (1/50625)*Xˆ2 Where X is the pay – off cost to the County.
 2 years ago
 2 years ago

This Question is Closed

fa272 Group TitleBest ResponseYou've already chosen the best response.0
Can anyone help me to draw the decision tree?
 2 years ago
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