DriveTek Problem

DriveTek Research Institute discovers that a computer company wants a new tape
drive for a proposed new computer system. Since the computer company does not
have research people available to develop the new drive, it will subcontract the
development to an independent research firm. The computer company has offered a
fee of $250,000 for the best proposal for developing the new tape drive. The contract
will go to the firm with the best technical plan and the highest reputation for technical
competence.

DriveTek Research Institute wants to enter the competition. Management estimates

a cost of $50,000 to prepare a proposal with a fifty-fifty chance of winning the
contract.

However, DriveTek's engineers are uncertain about how they will develop the tape
drive if they are awarded the contract. Three alternative approaches can be tried.
The first approach is a mechanical method with a cost of $120,000, and the
engineers are certain they can develop a successful model with this approach. A
second approach involves electronic components. The engineers estimate that the
electronic approach will cost only $50,000 to develop a model of the tape drive, but
with only a 50 percent chance of satisfactory results. A third approach uses
magnetic components; this costs $80,000, with a 70 percent chance of success.

DriveTek Research can work on only one approach at a time and has time to try only
two approaches. If it tries either the magnetic or electronic method and the attempt
fails, the second choice must be the mechanical method to guarantee a successful
model.

The management of DriveTek Research needs help in incorporating this information

into a decision to proceed or not.

The tutorial tab has step-by-step instructions for building the DriveTek decision tree.

383742449.xls Problem 19:49:53 04/09/2018

 DriveTek Tutorial

1. Activate the Tutorial sheet. From the Edit menu, choose Move or Copy Sheet. In the lower
left corner of the Move or Copy dialog box, check the Create a Copy box, and click OK.
Double-click the Tutorial (2) sheet tab, and rename the sheet DriveTek.

2. From the File menu, choose Open. Navigate to TreePlan.xla, and click OK. Alternatively,
install TreePlan.xla on the hard disk; for instructions, search Excel's help for "installing or
removing an add-in."

3. Select cell B1. From the Tools menu, choose Decision Tree. In the TreePlan...New dialog
box, click the New Tree button. A decision node with two branches appears.

4. Do not type the quotation marks in the following instructions. Select cell E2, and enter
"Prepare proposal." Select cell E4, and enter "-50000." Select cell E7, and enter "Don't prepare
proposal."

5. Select cell G3, or select the triangle graphic object in cell G3. From the Tools menu, choose
Decision Tree. In the TreePlan...Terminal dialog box, select Change to event node, select Two
branches, and click OK. The tree is redrawn.

6. Select cell I2, and enter "Awarded contract." Select cell I4, and enter "+250000." Select cell
I7, and enter "Not awarded contract."

7. Select cell K3, or select the triangle graphic object in cell K3. From the Tools menu, choose
Decision Tree. In the TreePlan...Terminal dialog box, select Change to decision node, select
Three branches, and click OK. The tree is redrawn.

8. Select cell M2, and enter "Use mechanical method." Select cell M4, and enter "-120000."
Select cell M7, and enter "Try electronic method." Select cell M9, and enter "-50000." Select
cell M12, and enter "Try magnetic method." Select cell M14, and enter "-80000."

9. Select cell O8, or select the triangle graphic object in cell O8. From the Tools menu, choose
Decision Tree. In the TreePlan...Terminal dialog box, select Change to event node, select Two
branches, and click OK. The tree is redrawn.

10. Select cell S13, or select the triangle graphic object in cell S13. From the Tools menu,
choose Decision Tree. In the TreePlan...Terminal dialog box, select Change to decision node,
select One branch, and click OK. The tree is redrawn.

11. Select cell U12, and enter "Use mechanical method." Select cell U14, and enter "-120000."
Alternatively, copy M2 and paste into U12, and copy M4 and paste into U14.

12. Select cell O10, or select the circle graphic object in cell O10. From the Tools menu,

383742449.xls Tutorial 19:49:53 04/09/2018

choose Decision Tree. In the TreePlan...Event dialog box, select Copy subtree, and click OK.

13. Select cell O18, or select the triangle graphic object in cell O18. From the Tools menu,
choose Decision Tree. In the TreePlan...Terminal dialog box, select Paste subtree, and click
OK. The tree is redrawn.

14. Select cell Q7, and enter "Electronic success." Select cell Q12, and enter "Electronic
failure." Select cell Q16, and enter "0.70." Select cell Q17, and enter "Magnetic success."
Select cell Q21, and enter "0.30." Select cell Q22, and enter "Magnetic failure."

15. The complete decision tree is the same as the Base Case sheet, except for formatting. The
rollback CE/EV +$20,000 in cell B27 is the expected value of the optimal strategy. The initial
choice, 1 in cell C26, is to Prepare the proposal; if Awarded the contract, the subsequent
choice, 2 in cell K11, is to Try the electronic $150,000, +$30,000, and -$50,000, with probabilities
0.25, 0.25, and 0.50, respectively.

383742449.xls Tutorial 19:49:53 04/09/2018

DriveTek Base Case
Use mechanical method
+$80,000
-$120,000 +$80,000

0.50
Electronic success
+$150,000
0.50 Try electronic method $0 +$150,000
Awarded contract
2 -$50,000 +$90,000 0.50
+$250,000 +$90,000 Electronic failure Use mechanical method
1 +$30,000
$0 +$30,000 -$120,000 +$30,000

0.70
Magnetic success
Prepare proposal +$120,000
Try magnetic method $0 +$120,000
-$50,000 +$20,000
-$80,000 +$84,000 0.30
Magnetic failure Use mechanical method
1 $0
$0 $0 -$120,000 $0

1 0.50
+$20,000 Not awarded contract
-$50,000
$0 -$50,000

Don't prepare proposal

$0
$0 $0

383742449.xls Base Case 19:49:53 04/09/2018

 Mike Middleton, McLaren, USF
383742449.xls Mechanical Cost Sensitivity
1999-03-02

Y Z AA AB AC AD AE
1 How cheap must the mechanical method be so Assumption (Input) Cost Choice
2 that it's the best choice to use first if you're Mechanical Cost 2
3 awarded the contract? -$120,000 -120000 2
4 -118000 2
5 (1) Select a cell where you can enter the cost of the -116000 2
6 mechanical method. See AA3. -114000 2
7 -112000 2
8 (2) Replace the three -$120,000 branch cash flows -110000 2
9 under the "Use mechanical method" branches with a -108000 2
10 formula referring to cell AA3. See cells L4, T14, and -106000 2
11 T24. -104000 2
12 -102000 2
13 (3) Try different negative cash flows in cell AA3 to -100000 1
14 verify that the branch cash flows are updated and the -98000 1
15 decision tree formulas are recalculating. For -96000 1
16 example, try -$90,000 in AA3, in which case the -94000 1
17 formula in cell J11 displays 1 instead of 2, indicating -92000 1
18 that if the mechanical method costs $90,000, then -90000 1
19 it's the best choice.
20
21 (4) To automate the sensitivity analysis, construct a
22 data table. Enter a list of mechanical costs in a
23 column. See AD3:AD18. Enter a formula for the
24 associated choice =J11 in AE2. Select AD2:AE18;
25 from the Data menu choose Table. In the Table
26 dialog box, select the range edit box for Column
27 input cell, and point to cell AA3 or type AA3; leave < Correction, 1999-03-02
28 the range edit box for Row input cell blank. Click OK.
29
30 (5) The data table results indicate that the cost of the
31 mechanical method must be $100,000 or less for it
32 to be the best choice if you're awarded the contract.
33 You can verify this by typing -$100,000 in cell AA3.
34 On the decision tree, note that the expected values
35 in cells M4 and M11 are the same.
 Inputs & Outputs

Use mechanical method

-$120,000 +$80,000

0.50 Try electronic method

Awarded contract
2 -$50,000 +$90,000
+$250,000 +$90,000

Prepare proposal
Try magnetic method
-$50,000 +$20,000
-$80,000 +$84,000

1 0.50
+$20,000 Not awarded contract

$0 -$50,000

Don't prepare proposal

$0 $0

Page 6
 Inputs & Outputs

All decision tree inputs refer to these defined na

Computed values and outputs depend on the e
+$80,000
Inputs
Proposal Cost -$50,000
0.50 Contract Revenue +$250,000
Electronic success Mechanical Cost -$120,000
+$150,000 Electronic Cost -$50,000
$0 +$150,000 Magnetic Cost -$80,000
P(Award) 0.50
0.50 P(Elec OK) 0.50
Electronic failure Use mechanical method P(Mag OK) 0.70
1 +$30,000 Computed
$0 +$30,000 -$120,000 +$30,000 P(No Award) 0.50
P(Elec Fails) 0.50
0.70 P(Mag Fails) 0.30
Magnetic success
+$120,000
$0 +$120,000

0.30
Magnetic failure Use mechanical method
1 $0
$0 $0 -$120,000 $0

-$50,000

$0

Page 7
 Inputs & Outputs

puts refer to these defined names.

and outputs depend on the eight inputs.

Outputs
EV(Opt Strat) +$20,000
Initial Choice Prepare
Awarded Choice Try Elec

Page 8
 Inputs & Outputs

ID Name Value Prob Pred Kind

0 TreePlan 0 0 0 D
1 0 12 T
2 0 0 E
3 0 0 T
4 2 D
5 2 T
6 0 4 T
7 0 4 E
8 0 4 E
9 7 T
10 7 D
11 8 T

Page 9
Inputs & Outputs

12 8 D
13 0 10 T

Page 10
 Inputs & Outputs

NS S1 S2 S3 S4 S5 Row Col Mark

2 2 3 0 0 0 25 1 1
0 0 0 0 0 0 22 21 1
2 4 5 0 0 0 18 5 1
0 0 0 0 0 0 32 5 1
3 6 7 8 0 0 10 9 1
0 0 0 0 0 0 27 9 1
0 0 0 0 0 0 2 13 1
2 9 10 0 0 0 9 13 1
2 11 12 0 0 0 19 13 1
0 0 0 0 0 0 7 17 1
1 13 0 0 0 0 12 17 1
0 0 0 0 0 0 17 17 1

Page 11
 Inputs & Outputs

1 1 0 0 0 0 22 17 1
0 0 0 0 0 0 12 21 1

Page 12
 Strategy Region Table

Use mechanical method

#NAME? #NAME?

#NAME? Try electronic method

Awarded contract
### #NAME? #NAME?
#NAME? #NAME?

Prepare proposal
Try magnetic method
#NAME? #NAME?
#NAME? #NAME?

### #NAME?
#NAME? Not awarded contract

$0 #NAME?

Don't prepare proposal

$0 $0

Page 13
 Strategy Region Table

All decision tree inputs refer to these defined na

Computed values and outputs depend on the e
#NAME?
Inputs
Proposal Cost -$50,000
#NAME? Contract Revenue +$250,000
Electronic success Mechanical Cost -$120,000
#NAME? Electronic Cost -$50,000
$0 #NAME? Magnetic Cost -$80,000
P(Award) 0.50
#NAME? P(Elec OK) 0.50
Electronic failure Use mechanical method P(Mag OK) 0.70
### #NAME? Computed
$0 #NAME? #NAME? #NAME? P(No Award) #NAME?
P(Elec Fails) #NAME?
#NAME? P(Mag Fails) #NAME?
Magnetic success
#NAME?
$0 #NAME?

#NAME?
Magnetic failure Use mechanical method
### #NAME?
$0 #NAME? #NAME? #NAME?

#NAME?

$0

Page 14
 Strategy Region Table

puts refer to these defined names. Probability of Electronic Succes

and outputs depend on the eight inputs. ### 0.00 0.10 0.20 0.30 0.40
0.00 ### ### ### ### ###
Outputs 0.10 ### ### ### ### ###
EV(Opt Strat) #NAME? 0.20 ### ### ### ### ###
Initial Choice #NAME? Probability 0.30 ### ### ### ### ###
Awarded Choice #NAME? of 0.40 ### ### ### ### ###
Magnetic 0.50 ### ### ### ### ###
Success 0.60 ### ### ### ### ###
0.70 ### ### ### ### ###
0.80 ### ### ### ### ###
0.90 ### ### ### ### ###
1.00 ### ### ### ### ###

Page 15
 Strategy Region Table

Probability of Electronic Success Probability of Elect

0.50 0.60 0.70 0.80 0.90 1.00 1.00 0.00 0.10 0.20 0.30
### ### ### ### ### ### 0.00 Mech Mech Mech Mech
### ### ### ### ### ### 0.10 Mech Mech Mech Mech
### ### ### ### ### ### 0.20 Mech Mech Mech Mech
### ### ### ### ### ### Probability 0.30 Mech Mech Mech Mech
### ### ### ### ### ### of 0.40 Mech Mech Mech Mech
### ### ### ### ### ### Magnetic 0.50 Mech Mech Mech Mech
### ### ### ### ### ### Success 0.60 Mech Mech Mech Mech
### ### ### ### ### ### 0.70 Mag Mag Mag Mag
### ### ### ### ### ### 0.80 Mag Mag Mag Mag
### ### ### ### ### ### 0.90 Mag Mag Mag Mag
### ### ### ### ### ### 1.00 Mag Mag Mag Mag

Copy columns, Paste Special | Values

Copy columns, Paste Special | Formats
Borders

Page 16
 Strategy Region Table

Probability of Electronic Success

0.40 0.50 0.60 0.70 0.80 0.90 1.00
Mech Elec Elec Elec Elec Elec Elec
Mech Elec Elec Elec Elec Elec Elec
Mech Elec Elec Elec Elec Elec Elec
Mech Elec Elec Elec Elec Elec Elec
Mech Elec Elec Elec Elec Elec Elec
Mech Elec Elec Elec Elec Elec Elec
Mech Elec Elec Elec Elec Elec Elec
Mag Elec Elec Elec Elec Elec Elec
Mag Mag Elec Elec Elec Elec Elec
Mag Mag Mag Elec Elec Elec Elec
Mag Mag Mag Mag Elec Elec Elec

Paste Special | Values

Paste Special | Formats

Page 17
Strategy Region Table

ID Name Value Prob

0 TreePlan 0 0
1 0
2 0
3 0
4
5
6 0
7 0
8 0
9
10
11

Page 18
Strategy Region Table

12
13 0

Page 19
 Strategy Region Table

Pred Kind NS S1 S2 S3 S4 S5 Row Col

0 D 2 2 3 0 0 0 25 1
12 T 0 0 0 0 0 0 22 21
0 E 2 4 5 0 0 0 18 5
0 T 0 0 0 0 0 0 32 5
2 D 3 6 7 8 0 0 10 9
2 T 0 0 0 0 0 0 27 9
4 T 0 0 0 0 0 0 2 13
4 E 2 9 10 0 0 0 9 13
4 E 2 11 12 0 0 0 19 13
7 T 0 0 0 0 0 0 7 17
7 D 1 13 0 0 0 0 12 17
8 T 0 0 0 0 0 0 17 17

Page 20
 Strategy Region Table

8 D 1 1 0 0 0 0 22 17
10 T 0 0 0 0 0 0 12 21

Page 21
 Strategy Region Table

Mark
1
1
1
1
1
1
1
1
1
1
1
1

Page 22
 Strategy Region Table

1
1

Page 23
 Risk Attitude

Use mechanical method

#NAME? #NAME?
#NAME?

#NAME? Try electronic method

Awarded contract
### #NAME? #NAME?
#NAME? #NAME? #NAME?
#NAME?

Prepare proposal
Try magnetic method
#NAME? #NAME?
#NAME? #NAME? #NAME?
#NAME?

### #NAME?
#NAME? Not awarded contract
#NAME?
$0 #NAME?
#NAME?

Don't prepare proposal

$0 $0
#NAME?

Page 24
 Risk Attitude

Outputs and computed values depend on origi

Low and High affect A and B for scaling the util
#NAME?
Inputs
Proposal Cost -$50,000
#NAME? Contract Revenue +$250,000
Electronic success Mechanical Cost -$120,000
#NAME? Electronic Cost -$50,000
$0 #NAME? Magnetic Cost -$80,000
#NAME? P(Award) 0.50
#NAME? P(Elec OK) 0.50
Electronic failure Use mechanical method P(Mag OK) 0.70
### #NAME? Computed
$0 #NAME? #NAME? #NAME? P(No Award) 0.50
#NAME? #NAME? P(Elec Fails) 0.50
#NAME? P(Mag Fails) 0.30
Magnetic success
#NAME?
$0 #NAME?
#NAME?
#NAME?
Magnetic failure Use mechanical method
### #NAME?
$0 #NAME? #NAME? #NAME?
#NAME? #NAME?

#NAME?

$0

Page 25
 Risk Attitude

uted values depend on original eight inputs and RT. Value Utility
ct A and B for scaling the utility function. -$50,000 #NAME? 1.0000
-$45,000 #NAME?
0.9000
Outputs -$40,000 #NAME?
0.8000
CE(Opt Strat) #NAME? -$35,000 #NAME?

Utility or Expected Utility

0.7000
Initial Choice #NAME? -$30,000 #NAME?
0.6000
Awarded Choice #NAME? -$25,000 #NAME?
-$20,000 #NAME? 0.5000

Exponential Utility Inputs -$15,000 #NAME? 0.4000

RT +$150,000 -$10,000 #NAME? 0.3000
Low -$50,000 U(Low) = 0 -$5,000 #NAME? 0.2000
High +$150,000 U(High) = 1 $0 #NAME? 0.1000
Computed +$5,000 #NAME? 0.0000
A #NAME? +$10,000 #NAME? -$50,000 $0
B #NAME? +$15,000 #NAME? Monetary
+$20,000 #NAME?
+$25,000 #NAME?
+$30,000 #NAME?
+$35,000 #NAME?
+$40,000 #NAME?
+$45,000 #NAME?
+$50,000 #NAME?
+$55,000 #NAME?
+$60,000 #NAME?
+$65,000 #NAME?
+$70,000 #NAME?
+$75,000 #NAME?
+$80,000 #NAME?
+$85,000 #NAME?
+$90,000 #NAME?
+$95,000 #NAME?
+$100,000 #NAME?
+$105,000 #NAME?
+$110,000 #NAME?
+$115,000 #NAME?
+$120,000 #NAME?
+$125,000 #NAME?
+$130,000 #NAME?
+$135,000 #NAME?
+$140,000 #NAME?
+$145,000 #NAME?
+$150,000 #NAME?

Page 26
 Risk Attitude

1.0000

0.9000

0.8000
Utility or Expected Utility

0.7000

0.6000

0.5000

0.4000

0.3000

0.2000

0.1000

0.0000
-$50,000 $0 +$50,000 +$100,000 +$150,000

Monetary Value or Certainty Equivalent

Page 27
 Risk Attitude

ID Name Value Prob Pred Kind

0 TreePlan 0 0 0 D
1 0 12 T
2 0 0 E
3 0 0 T
4 2 D
5 2 T
6 0 4 T
7 0 4 E
8 0 4 E
9 7 T
10 7 D
11 8 T

Page 28
Risk Attitude

12 8 D
13 0 10 T

Page 29
 Risk Attitude

NS S1 S2 S3 S4 S5 Row Col Mark

2 2 3 0 0 0 25 1 1
0 0 0 0 0 0 22 21 1
2 4 5 0 0 0 18 5 1
0 0 0 0 0 0 32 5 1
3 6 7 8 0 0 10 9 1
0 0 0 0 0 0 27 9 1
0 0 0 0 0 0 2 13 1
2 9 10 0 0 0 9 13 1
2 11 12 0 0 0 19 13 1
0 0 0 0 0 0 7 17 1
1 13 0 0 0 0 12 17 1
0 0 0 0 0 0 17 17 1

Page 30
 Risk Attitude

1 1 0 0 0 0 22 17 1
0 0 0 0 0 0 12 21 1

Page 31
 TreePlan Help

TreePlan for Excel (Unregistered) 1.61

Decision Tree Software

Add-In for Microsoft Excel 4, 5, 7,and 97
for Windows and Macintosh

TreePlan helps you build and modify decision tree diagrams

in Excel worksheets. TreePlan automatically puts formulas
on your worksheet for evaluating these trees.

To build a new decision tree, first create a new worksheet.

Then start TreePlan in one of two ways:

(1) Choose Decision Tree... from the Options menu

(Excel 4) or the Tools menu (Excel 5, 7, and 97), or
(2) Press the shortcut key: Control + t.

When the TreePlan...New dialog box appears, choose

New Tree. TreePlan builds a tree diagram with an initial
decision node and two branches. The tree diagram begins
with the upper left corner of the diagram near the active
cell at the time New... is chosen. TreePlan assigns the
name TreeDiagram to the range of the tree diagram and
initially sets Excel's Print_Area equal to TreeDiagram.

To change the structure of the tree diagram, select a node,

start TreePlan, and choose commands from a TreePlan
dialog box. To select a terminal node in Excel 97, select
the square cell next to the vertical line at the end of a
terminal branch.

On the left side of each branch of the tree diagram, there is

a name field above the branch line and a partial-cash-flow
value field below the line. On the left side of event
branches, there is also a probability field above the name
field. Decision nodes also have a number in them indicating
the optimal branch.

On the right side of each branch of the tree diagram, there

is a rollback Expected Value field below the line near
each node. TreePlan automatically puts the rollback EV
formula into this cell: maximum of successor EVs at a
decision node, and expected value of successor EVs at an
event node.

To the right of the terminal nodes, there is an endpoint

value field that sums all of the partial cashflows in the tree.

Internally, TreePlan uses the TreeData range, near cell

GV1000, to construct the TreeDiagram.

Page 32
 TreePlan Help

CAUTION: Do not insert or delete rows or columns in the

TreeDiagram or TreeData ranges. Modify the tree diagram
only by using TreePlan's menu options.

TREEPLAN...DECISION and
TREEPLAN...EVENT dialog boxes

Add branch
Adds a single branch after the selected node .
(No more than 5 branches are allowed.)

Copy subtree
Copies the selected node and all its successors to the
TreePlan clipboard.

Insert decision
Inserts a decision node and single branch before the
selected node.

Insert event
Inserts an event node and single branch before the
selected node.

Change to decision
Changes the selected event node to a decision node and
erases the probability fields from the event branches.

Change to event
Changes the selected decision node to an event node.

Shorten tree
Removes the selected node and its single successor
branch.

Change to terminal
Changes the selected node to a terminal node. All
successor branches are erased.

Remove branch
Erases the selected node, the previous branch, and any
successor branches and nodes.

TREEPLAN...TERMINAL dialog box

Change to decision node

Changes the selected terminal node to a decision node
with one to five successor branches.

Page 33
 TreePlan Help

Change to event node

Changes the selected terminal node to an event node
with one to five successor branches.

Paste subtree
Pastes the subtree onto the selected terminal node from
the TreePlan clipboard.

Remove previous branch

Erases the selected terminal node and the previous
branch.

TREEPLAN...SELECT dialog box

Cells
To select a set of nonadjacent cells for subsequent
formatting, select the appropriate option button.
(In large trees, this option may not be available.)

Objects
To select all objects, choose Select Special from the
Formula menu, and select the Objects option button.
(In large trees, this option may not be available.)

Columns
To select a set of nonadjacent columns for subsequent
formatting, select the appropriate option button.

TREEPLAN...OPTIONS dialog box

Certainty Equivalents
The default is to rollback the tree using expected values.
If you chose to use exponential utilities, TreePlan will
compute utilities and certainty equivalents at each node.
For the Maximize option, the rollback formulas are
U=A-B*EXP(-X/RT) and X=-LN((A-U)/B)*RT, and for the
Minimize option, U=A-B*EXP(X/RT) and
X=LN((A-U)/B)*RT.

NOTE: TreePlan uses the name RT to represent the

risk tolerance parameter of the exponential utility
function; the names A and B determine scaling.
If the names A, B, and RT don't exist, they are initially
defined as A=1, B=1, and RT=999999999999. The
name UseExpUtility is a flag indicating whether to use
exponential utilities or expected values.

Page 34
 TreePlan Help

Decision Node EV/CE Choices

The default is to Maximize profits. If you choose to
Minimize costs instead, the cash flows are interpreted
as costs, and decisions are made by choosing the
minimum expected value/CE rather than the maximum.
TreePlan uses the name MinimizeCosts as a flag
indicating whether to maximize profits or minimize
costs.

ACKNOWLEDGMENT

Sincere thanks to Professor James E. Smith, Duke

University, for adding exponential utility and several
other features.

TREEPLAN REGISTRATION

TreePlan is distributed as shareware and may be provided

at no charge to the user for evaluation. If you find this
program useful and continue to use TreePlan after a 30-day
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A site license agreement is required to use TreePlan on a

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Please contact Decision Support Services for details.

An evaluation copy of TreePlan and other information may

be obtained from the Decision Support Services web site:

http://ourworld.compuserve.com/homepages/decision

TREEPLAN REGISTRATION BY CHECK

The registration fee for TreePlan is $29.00 (California

residents, add sales tax) plus $4.00 shipping to U.S. and
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U.S. funds drawn on a U.S. bank) payable to Decision

Page 35
 TreePlan Help

Support Services, and mail to:

Decision Support Services Voice/Fax (415) 673-6217

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Any questions about the status of the shipment of the order,

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To insure that you get the latest version, PsL will notify us
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individuals may distribute TreePlan as long as you clearly
explain the shareware concept, the need for users to
register the products they use, and the fact that the price of
your disks/CD-ROM/service is a copying fee only and does
not constitute payment for the product.

Please direct questions about volume discounts, dealer

pricing, rack vending, book bundling, or other distribution
methods to 415-673-6217 (Voice/Fax), Compuserve

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 TreePlan Help

71330,3445, or Decision Support Services, 2105 Buchanan

Street, #1, San Francisco, CA 94115.

ABOUT SHAREWARE

Shareware is a method of distributing software that gives

you a chance to try software before buying it. If you try a
shareware program and continue using it, you are expected
to register. Individual programs differ on the details about
the evaluation period, registration fee, and support.

Copyright laws apply to both shareware and commercial

software, and the copyright holder may choose to retain all
rights. The only meaningful difference between shareware
and commercial software is the method of distribution.
Shareware authors specifically grant the rights to copy and
distribute the software and documentation, either to all
users and by all methods, or with some restrictions.

You should try to find software that suits your needs and
budget, whether it's commercial or shareware. Both types
have good programs and bad, but shareware makes finding
the right program easier, because you can try before you
buy. Also, because shareware distribution costs are much
lower, shareware prices are often lower, too. Finally,
shareware has the ultimate money-back guarantee: if you
don't use it, you don't pay for it.

ASP OMBUDSMAN INFORMATION

This program is produced by a member of the Association

of Shareware Professionals (ASP). ASP wants to make
sure that the shareware principle works for you. If you are
unable to resolve a shareware-related problem with an ASP
member by contacting the member directly, ASP may be
able to help. The ASP Ombudsman can help you resolve a
dispute or problem with an ASP member, but does not
provide technical support for members' products. Please
write to the ASP Ombudsman at 545 Grover Road,
Muskegon, MI 49442-9427, Fax 616-788-2765, or send a
Compuserve message via Compuserve Mail to ASP
Ombudsman 70007,3536.

WARRANTY

Users of TreePlan must accept this disclaimer of warranty:

TreePlan copyrighted software and documentation are

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 TreePlan Help

provided on an 'as is' basis. The author and Decision

Support Services disclaim all warranties, expressed or
implied, including, without limitation, the warranties of
merchantability and of fitness for any purpose. The user
assumes all risks as to the quality and performance of this
software and documentation. The author and Decision
Support Services assume no liability for indirect,
consequential, or incidental damages which may result from
the use or misuse of TreePlan. Some states do not allow
the exclusion of the limit of liability for consequential or
incidental damages, so the above limitation may not apply
to you. This agreement shall be governed by the laws of the
State of California and shall inure to the benefit of the author
and Decision Support Services and any successors,
administrators, heirs, and assigns. Any action or
proceeding brought by either party against the other arising
out of or related to this agreement shall be brought only in a
state or federal court of competent jurisdiction located in the
city and county of San Francisco, California. The parties
hereby consent to in personam jurisdiction of said courts.

USE OF SHAREWARE VERSION BEYOND 30 DAYS

If you purchase one of the following textbooks, you may

continue to use the shareware version of TreePlan as long
as you own the book:

Ragsdale, Spreadsheet Modeling and Decision Analysis

Winston & Albright, Practical Management Science

If you are a student, faculty, or staff at a university that has

an academic site license, you may continue to use the
shareware version of TreePlan for the academic year.

AUTHOR INFORMATION

Please send comments about TreePlan and suggestions

for improvements to:

Michael R. Middleton
McLaren School of Business
University of San Francisco
2130 Fulton Street
San Francisco, CA 94117

Internet: middleton@usfca.edu

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 TreePlan Help

TreePlan for Excel (Unregistered) 1.61

Copyright 1996
Michael R. Middleton
All Rights Reserved

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 Hints

Hints: TreePlan and Excel 5

Hiding Selected Cells

To hide all rollback EV/CE cells:

* select one rollback EV/CE cell
* from the Tools menu choose Decision Tree...
* in the TreePlan...Select dialog box select (Cells) Rollback EVs/CEs
* click OK
* from the Format menu choose Cells...; in the Format Cells dialog box select the Number tab
* at the bottom of the Number tab select the Code field
* type three semicolons as a custom code
* click OK

Use similar steps to hide all cells of any specific type.

Pasting Into Word

To paste a copy of a decision tree into Word:

* from Excel's Tools menu select Options...; in the Options dialog box select the View tab
* in the View tab clear the check boxes for Formulas and Gridlines
* click OK
* from Excel's Edit menu select Go To...
* in the Go To list box select TreeDiagram
* click OK
* hold down the shift key and from Excel's Edit menu select Copy Picture...
* in the Copy Picture dialog box select (Appearance) As Shown when Printed
* click OK
* switch from Excel to Word
* select an empty paragraph
* from Word's Edit menu select Paste

Probability Sensitivity Analysis (Two Branches)

To see how expected value of the optimal strategy depends on a probability of interest:
* select the probability cell of the other branch of the event set
* enter the formula "=1-P" where P is a reference to the probability cell of interest
* enter a list of probabilities in a column
* select the cell in the row above the first probability in the column to the right
* enter the formula "=R" where R is a reference to the rollback cell of the initial decision node
* select the entire data table which includes the blank cell above the probability list,
the cells containing the list of probabilities, the cell with the formula referencing the
rollback cell, and the empty cells below the formula cell
* from the Data menu select Table...

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 Hints

* in the Table dialog box select the Column Input Cell field
* enter a reference to the probability cell of interest
* click OK

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