GSCM209 The Supply Chain Management Decision Support Tools and
Week 1 Quiz
and 14) A do-it-yourself homeowner is installing a new toilet. While installing
the toilet, he must decide on what kind of connecting pipe he will install to
the water supply. There are two available options, one that has a shut-off
valve in case of a leak and a cheaper one without the shut-off valve. Suppose that
the shut-off valve pipe costs an extra $10 and that the homeowner must buy one
of the two.
points) In terms of p, what are the probabilities for each node (A1, A2, B1,
points) If the chance of a leak causing household damage is 4%, at what dollar
amount of household damage is the owner neutral on which pipe to buy?
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