Hale's Productions is considering producing a pilot for a comedy series in the hope of selling it to a major streaming service.The streaming service may decide to reject the series, but it may also decide to purchase the rights to the series for either oneor two years. At this point in time, Hale may either produce the pilot and wait for the streaming service's decision or transferthe rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands ofdollars) are as follows:Decision AlternativeP(F) = 0.69P(U) = 0.31P(S₁IF) = = 0.07P(S₂IF) = 0.29P(S3IF) = 0.64Produce pilot, d₁Sell to competitor, d₂The probabilities for the states of nature are P(S₁) = 0.1878, P(S₂) 0.3210, and P(S3) = 0.4912. For a consulting fee of$5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable streamingservice reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review andthat the following probabilities are relevant.P(S₁IU) = 0.45P(S₂1U) = 0.39P(S3|U) = 0.16AgencyNo AgencyReject, S12F-100100thousand dollars(a) Construct a decision tree for this problem. (Enter your answers in thousands of dollars.)S₁$2334State of Nature51 Year, S₂ 2 Years, S3(g) What is the recommended decision?d₁d₂(f) Is the agency's information worth the $5,000 fee?YesNod₂What is the expected value (in thousands of dollars)?thousand dollarsd₁Agency; if favorable, produce the pilotAgency; if unfavorable, sell to competitorNo agency; sell to competitorNo agency; produce the pilotd₂5010068910=11$₂S3S₁5253S1S2$3S₁52$3(b) What is the recommended decision if the agency opinion is not used?produce pilot, d₁sell to competitor, d₂S152150$3(c) What is the expected value of perfect information (in thousands of dollars)?thousand dollars100(d) What is Hale's optimal decision strategy assuming the agency's information is used?If favorable, ---Select--- ✓ If unfavorable, ---Select--- ♥(e) What is the expected value (in thousands of dollars) of the agency's information? (Round your answer to two decimalplaces.)mWhat is the maximum that Hale should be willing to pay (in thousands of dollars) for the information? (Round youranswer to two decimal places.)thousand dollars

Hale's Productions is considering producing a pilot for a comedy series in the hope of selling it to a major streaming service. The streaming service may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the streaming service's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: Decision Alternative P(F) = 0.69 P(U) = 0.31 P(S₁IF) = 0.07 P(S₂IF) = 0.29 P(S3IF) = 0.64 Reject, S₁ Produce pilot, d₁ Sell to competitor, d₂ The probabilities for the states of nature are P(S₁) = 0.1878, P(S₂) = 0.3210, and P(S3) = 0.4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable streaming service reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant. P(S₁IU) = 0.45 P(S₂IU) = 0.39 P(S₂|U)= 0.16 -100 State of Nature 100 1 Year, S2 2 Years, S3 50 100 150 100

Hale's Productions is considering producing a pilot for a comedy series in the hope of selling it to a major streaming service. The streaming service may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the streaming service's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: Decision Alternative P(F) = 0.69 P(U) = 0.31 P(S₁IF) = 0.07 P(S₂IF) = 0.29 P(S3IF) = 0.64 Reject, S₁ Produce pilot, d₁ Sell to competitor, d₂ The probabilities for the states of nature are P(S₁) = 0.1878, P(S₂) = 0.3210, and P(S3) = 0.4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable streaming service reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant. P(S₁IU) = 0.45 P(S₂IU) = 0.39 P(S₂|U)= 0.16 -100 State of Nature 100 1 Year, S2 2 Years, S3 50 100 150 100

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Hale's TV Productions is considering producing a pilot for a comedy series in the hope of selling it to a major television network. The network may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the network's decision or transfer the rights for the pilot and series to a competitor for $150,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: State of Nature Decision Alternative Reject, S1 1 Year, S2 2 Years, S3 Produce pilot, d1 -100 50 250 Sell to competitor, d2 150 150 150 The probabilities for the states of nature are P(S1) = 0.20, P(S2) = 0.30, and P(S3) = 0.50. For a consulting fee of $55,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable network reaction to the series. Assume that the agency review will result in a favorable (F) or an…
Hale's TV Production is considering producing a pilot for a comedy series in the hope of selling it to a major television network. The network may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the network's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: The probabilities for the states of nature are P(S1) = 0.20, P(S2) = 0.30, and P(S3) = 0.50. For a consulting fee of $5000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable network reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant: Construct a decision tree for this problem What is the recommended decision if…
Hale's Productions is considering producing a pilot for a comedy series in the hope of selling it to a major streaming service. The streaming service may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the streaming service's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: Decision Alternative Produce pilot, d₁ Sell to competitor, d₂ 100 P(F) = 0.69 P(U)= 0.31 P(S₁IF) = 0.08 P(S₂IF) = 0.28 P(S3|F) = 0.64 i Decision Tree Agency 1 Reject, S₁ The probabilities for the states of nature are P(S₁) = 0.1947, P(S₂) = 0.3141, and P(S3) = 0.4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable streaming service reaction to the series. Assume that the…
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Chris, the president of SGC Properties, is considering submitting a bid to purchase property that will be sold by sealed bid at a county tax foreclosure. Chris’ initial judgment is to submit a $5 million. Based on his experience, Chris estimates that a bid of $5 million will have a 0.2 probability of being the highest bid and securing the property for SGC. The current date is July 1. Sealed bids for the property must be submitted by September 15. The winning bid will be announced on October 1. If SGC submits the highest bid and obtains the property, the firm plans to build and sell a complex of luxury condominiums. However, a complicating factor is that the property is currently zoned for single-family residences only. Chris believes that a referendum cold be placed on the voting ballot in time for the November election. Passage of the referendum would change the zoning of the property and permit construction of the condominiums. The sealed-bid procedure requires the bid to be…
Chris, the president of SGC Properties, is considering submitting a bid to purchase property that will be sold by sealed bid at a county tax foreclosure. Chris’ initial judgment is to submit a $5 million. Based on his experience, Chris estimates that a bid of $5 million will have a 0.2 probability of being the highest bid and securing the property for SGC. The current date is July 1. Sealed bids for the property must be submitted by September 15. The winning bid will be announced on October 1. If SGC submits the highest bid and obtains the property, the firm plans to build and sell a complex of luxury condominiums. However, a complicating factor is that the property is currently zoned for single-family residences only. Chris believes that a referendum cold be placed on the voting ballot in time for the November election. Passage of the referendum would change the zoning of the property and permit construction of the condominiums. The sealed-bid procedure requires the bid to…
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