Essay
Super Cola is also considering the introduction of a root beer drink.The company feels that the probability that the product will be a success is .6.The payoff table is as follows:
The company has a choice of two research firms to obtain information for this product.Stanton Marketing has market indicators,I1 and I2 for which P(I1SYMBOL 189 \f "Symbol"s1)= .7 and P(I1SYMBOL 189 \f "Symbol"s2)= .4.New World Marketing has indicators J1 and J2 for which P(J1SYMBOL 189 \f "Symbol"s1)= .6 and P(J1SYMBOL 189 \f "Symbol"s2)= .3.
a.What is the optimal decision if neither firm is used? Over what probability of success range is this decision optimal?
b.What is the EVPI?
c.Find the EVSIs and efficiencies for Stanton and New World.
d.If both firms charge $5,000,which firm should be hired?
e.If Stanton charges $10,000 and New World charges $4,000,which firm should Super Cola hire? Why?
Correct Answer:
Verified
a.Introduce root beer;p < .483
b.EVPI = ...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
b.EVPI = ...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q18: Decision tree probabilities refer to<br>A) the probability
Q23: An appliance dealer must decide how many
Q24: Use graphical sensitivity analysis to determine the
Q25: If P(high) = .3, P(low) = .7,
Q26: Fold back the decision tree and state
Q27: The table shows both prospective profits and
Q33: To find the EVSI,<br>A) use the EVPI
Q36: After all probabilities and payoffs are placed
Q60: Making a good decision<br>A) requires probabilities for
Q72: Decision alternatives are structured so that several