Conventional way of radiation treatment was to target cancer cells while some of the healthy sells also get affected. The instrument to provide radiation treatment cost $2 million and it is 90% reliable. The new concept targets only the cancer cells and the equipment costs only $1.25 million with unknown reliability since the equipment has not been used. The design-engineers assign a reliability value of 0.98 assuming all of the assumptions are correct. If all of the assumptions are not correct (equal likely probability), reliability is estimated only about 0.8. Since liability cost is $20 million, the engineer faces a decision for the following two alternates:
•Capture the opportunity of accomplishing cost saving and high reliability
•Assure a reasonable reliability by the conventional design
Set up a decision tree and determine the expected total cost of both designs. Which design would you prefer?