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Prior to beginning work on this assignment, review Chapter 6: Decision Making Under Uncertainty.
Read Case 6.4, “Developing a Helicopter Component for the ARMY” in your course text.
For Part 1 of this assignment, using an Excel spreadsheet,
Develop a decision tree to maximize Ventron’s expected monetary value (EMV).
This includes the revenue from this project, the side benefits (if applicable) from an improved extrusion process, and relevant costs.
You don’t need to worry about time value of money; that is, no discounting or net present values are required.
Summarize your findings in words in the spreadsheet.
For Part 2 of this assignment, in a one to two page paper,
Determine what value of side benefits would make Ventron indifferent between the two alternatives.
Evaluate how much Ventron would be willing to pay, right now, for perfect information about both steps of the improved extrusion process.