Question 1
(a) Use an influence diagram to represent the following decision problem, stating any assumptions you have made.
ABC Chemicals are planning to start manufacturing a new pharmaceutical product. Initially, they must decide whether to go for large-scale or small scale production. Having made this decision, the profits that they make will also depend on (i) the state of the economy over the next 2 years; (ii) whether or not a rival manufacturer launches a similar product; and (iii) the amount which ABC decides to spend on advertising the product (this decision will itself be influenced by the scale of production which ABC opt for, whether a rival product is launched and the state of the economy).
(b) Use your influence diagram to derive the outline of a decision tree which could be used to represent ABC's problem.
Question 2
Need some guidance in finding potential areas of risk. Here is the scenario and questions:
Fresh Foods (FF) is a medium-sized specialty grocery business located in the coastal city of Seaside. FF sells only fresh produce, poultry, seafood, dairy, and bakery goods. All fresh products are purchased locally. Bakery products are baked on the FF premises. FF also provides catering for residential parties and business events using only FF products.
You and your sibling, Taylor, together own and operate the grocery and catering businesses.
The FF grocery store is busy and heavily trafficked with customers every day. You and Taylor are concerned about potential accidents on the store property and other liabilities that could arise with customers and employees. You both believe you need to make some changes to reduce FF's liabilities.
You volunteer to develop a plan to identify and minimize potential tort risks that FF faces in its grocery store operations. You and Taylor will use the plan to begin updating and refining store policies and procedures to prevent and/or minimize liabilities for FF.
- Analyze and describe the specific product liability risks that FF faces in it catering business;
- Develop and explain policies and/or procedures FF could implement to prevent or minimize each specific product liability risk.