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Construct a decision tree Assignment | College Homework Help

Jase Hansen is interested in leasing a sports-utility vehicle and has contacted three automobile dealers for pricing information. Each dealer offered Jase a 24-month lease with no down payment due at the time of signing. Each lease includes a monthly cost, mileage allowances, and the cost for additional miles. The details are given in the below table.

DealerMonthly Cost ($)Mileage AllowancesCost per
Additional Mile ($)
True Vehicle30040,0000.30
FCO36046,0000.35
Jack’s Auto41050,0000.15

Jase decided to choose the lease option that will minimize his total 24-month cost. He is not sure how many miles he will drive in the next two years. Hence, for the purpose of decision, assume that Jase wants to evaluate options of driving 20,000 miles per year, 23,000 miles per year, and 25,000 miles per year.

  1. Construct a decision tree based on the payoff table constructed in the previous problem.
  2. Recommend a decision based on the use of optimistic, conservative, and minimax regret approaches?

Solution:

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