Example 2 –Joe’s Garage
Joe’s garage is considering hiring another mechanic. The mechanic would cost them an additional $50,000 / year in salary and benefits. If there are a lot of accidents in Providence this year, they anticipate making an additional $75,000 in net revenue. If there are not a lot of accidents, they could lose $20,000 off of last year’s total net revenues. Because of all the ice on the roads, Joe thinks that there will be a 70% chance of “a lot of accidents” and a 30% chance of “fewer accidents”. Assume if he doesn’t expand he will have the same revenue as last year.
Draw a decision tree for Joe and tell him what he should do.