A removal firm has received an order to remove the contents of a house
situated 100 kilometres from its offices. The firm operates two sizes of
removal vans; medium and large and, from a description of the contents of the
house, the manager is 80 percent confident that a medium van is large enough
for the job. If she sends a medium van and the load is in fact medium, the cost
of the job will be Sh. 11,000; if, however, the load is large then the van will
have to make a double journey, in which case an additional cost of Sh. 4,000
will be incurred. To avoid the possibility of a double journey, a large van could
be sent, in which case the cost will be Sh. 12,000. The customer has quoted a
price of Sh. 14,500 for the job.
(i) Determine which van – medium or large the manager should send.
(ii) Show the above information in a decision tree diagram (2
(iii) Suppose the manager of the removal firm considers the possibility of
asking Joe, an employee who is about to make a journey in the general
direction of the house in question, to make a detour and call at the house
to estimate the size of the load. The manager is only 70 percent
confident that Joe will estimate the size of load correctly. Show this in a
decision tree diagram and determine the probability that the load is
medium and Joe estimates that he load is indeed medium.