A Brief DPL Tutorial

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♦ Input the formula for p = [exp(r*t)-d]/(u-d) ♦ Click Enter and OK ♦ Click on the Chance Node icon to create a Chance Node. ♦ Name this node “Yr1” ♦ Modify the outcomes so ♦ Click on the Data tab ♦ Input “p” as the probability ♦ Input $100*u for the “Up” outcome ♦ Input $100*d for the “Down” outcome ♦ Click OK that we have only two states: “Up” and “Down” Note that there is no need to enter the down probability, as the model assumes it is (1-p) automatically. We must now create 5 chance nodes that are very similar. The easiest way to do this is to make a copy of this node and then edit in the modifications. 2 ♦ Click on the “Yr1” node ♦ Click “Edit / Copy” and then “Edit / Paste”. A new chance node will appear ♦ Change the name of the new chance node to “ Yr2” ♦ In the Data tab, replace “100*u” with “Yr1*u” for the “Up” outcome ♦ Replace “100*d” with “Yr1*d” for the “Down” outcome ♦ Click on the “Yr2” node ♦ Click “Edit / Copy” and then “Edit / Paste”. A new chance node will appear ♦ Change the name of the new chance node to “ Yr3” ♦ In the Data tab, replace “Yr1*u” with “Yr2*u” for the “Up” outcome ♦ Replace “Yr1*d” with “Yr2*d” for the “Down” outcome Repeat for Chance Nodes “Yr4” and “Yr5”. In the Decision Tree Pane: ♦ Click anywhere inside the pane to make this the active pane ♦ All 5 Chance Nodes are already in place. ♦ Click on any branch of the “Yr1” node. The Get/Pay menu po ♦ Delete the formula there and leave it blank ps up. ♦ Click OK ♦ Repeat for all chance nodes of the tree except for the last one (Yr5). 2 Unfortunately this does not work with Student Version 4.0, only with the Full Version 12
At t his point, your screen should look like Figure 12: The policy tree is shown in Figure 13: Yr1 [128.403] Up .510 Down .490 Yr2 [164.872] Yr2 [90.4837] Up .510 Down .490 Yr3 [211.7] Yr3 [116.183] Figure 12 Yr4 Up [271.828] .510 Down .490 Up .510 Down .490 Figure 13 13 Yr4 [149.182] Yr4 [149.182] Yr4 [81.8731] Up .510 Down .490 Up .510 Down .490 Up .510 Down .490 Up .510 Down .490 Yr5 [349.034] Yr5 [191.554] Yr5 [191.554] Yr5 [105.127] Yr5 [191.554] Yr5 [105.127] Yr5 [105.127] Yr5 [57.695] Up .510 Down .490 Up .510 Down .490 Up .510 Down .490 Up .510 Down .490 Up .510 Down .490 Up .510 Down .490 Up .510 Down .490 Up .510 Down .490 [448.169] 448.169 [245.96] 245.96 [245.96] 245.96 [134.986] 134.986 [245.96] 245.96 [134.986] 134.986 [134.986] 134.986 [74.0818] 74.0818 [245.96] 245.96 [134.986] 134.986 [134.986] 134.986 [74.0818] 74.0818 [134.986] 134.986 [74.0818] 74.0818 [74.0818] 74.0818 [40.657] 40.657
Page 1 and 2: A Brief DPL Tutorial When you first
Page 3 and 4: Oil field - A You own a lease to dr
Page 5 and 6: ♦ Click on “Node / Add Chance
Page 7 and 8: ♦ Click OK In the Decision Tree P
Page 9 and 10: Substituting a Get/Pay Expression f
Page 11: Modeling a Lognormal Distribution w
Page 15 and 16: ♦ Click on any branch of the “Y
Page 17 and 18: Yr1 Up Down Exercise1 Yes (Yr1-X)/e
Page 19 and 20: ♦ The three uncertain outcomes (L
Page 21 and 22: OperatingCost ProdRate DevelCost PS
Page 23: ♦ When the window appears, click

A Brief DPL Tutorial

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