Quantitative Business for Managers
Pre-MBA
Assignment -1-
Exercise -1-
Ruth Jones' Heart Bypass Operation
Ruth Jones, a robust 50-year-old insurance adjuster living in the northern suburbs of Chicago, has been diagnosed by a University of Illinois cardiologist as having a defective heart valve. Although otherwise healthy, Jones' heart problem could prove fatal if left untreated.
Firm research data are not yet available to predict the likelihood of survival for a woman of Mrs. Jones' age and condition without surgery. Based on his own experience and recent medical journal articles, the cardiologist tells her that if she selects to avoid surgical treatment of the valve problem, chances of survival would be approximately as follows: only a 50 percent chance of living one year, a 20 percent chance of surviving for two years, a 20 percent rate for five years, and a 10 percent chance of living to age 58. He places her probability of survival beyond age 58 without a heart bypass to be extremely low.
The bypass operation, however, is a serious surgical procedure. Five percent of the patients succumb during the operation or its recovery stage, with an additional 45 percent dying during the first year. Twenty percent survive for 5 years, 13 percent survive for 10 years, and 8, 5, and 4 percent survive, respectively, for 15, 20, and 25 years.
Do you think Mrs. Jones should select the bypass operation? Your answer should be based on a decision tree that should be presented in your answer sheet.
Exercise -2-
Ski Right
After retiring as a physician, Bob Guthrie became an avid downhill skier on the steep slopes of the Utah Rocky Mountains. As an amateur inventor, Bob was always looking for something new. With the recent deaths of several celebrity skiers, Bob knew he could use his creative mind to make skiing safer and his bank account larger. He knew that many deaths on the slopes were caused by head injuries. Although ski helmets have been on the...