Question

Zaki, a developer, has a plot of 20-acre land near Klang town. He is considering whether to build a row of single story terrace houses or bungalow houses. He also has the option of not to proceed with the project. Given a favorable market, he estimate that he will earn a profit of RM60,000 if he builds single story terrace houses and RM800,000 if he builds bungalow houses. However, with an unfavorable market condition, he estimates that he will lose RM100,000 with the single story houses and RM400,000 with the bungalow houses. The probability of favorable market is 0.7.

1. Identify the problem

2. what is the objective to use

3. what is the problem and the method to use this is a question on Quantitative analysis

Answer 1

1. Identify the problem
The problem is either to build a row of a single storey terrace houses or bungalow houses.
2. What is the objective to use?
The objective here is to determine the better option that would yield a higher profit.
3. What is the problem and the method to use. this is a question on quantitative analysis
This problem can be solved using a decision tree diagram. A decision tree is a graphical diagram consisting of nodes and branches. In a decision tree, the user computes the expected value of each outcome and makes a decision based on these expected values. The primary benefit of a decision tree is that it provides an illustration (or picture) of the decision-making process. This makes it easier to correctly compute the necessary expected values and to understand the process of making the decision.

Explanation:

1. The problem is either to build a row of a single storey terrace houses or bungalow houses.

2. The objective here is to determine the better option that would yield a higher profit.