Your company, Drones, INC, must decide on their path forward in regard to new or expandedfacilities for drone production. The table below shows the potential profits/losses for eachdecision alternative in each of 4 market conditions (states of nature). Note that the numbers inred (with a minus sign) are losses. NOTE: I have provided some extra columns and rows foryour computations. NOTE THAT THE OBJECTIVE IS TO MAXIMIZE PROFIT.STATES OF NATURE FOR POTENTIALMARKETS FOR DRONESDECISIONEXCELLENT GOODFAIRPOORALTERNATIVESOPEN 2 NEW$600,000$400,000 -$200,000 -$500,000PLANTS FORPRODUCTIONOPEN 1 NEW$500,000$200,000 -$100,000 -$300,000PLANT FORPRODUCTIONEXPAND$150,000$75,000$0-$100,000CURRENTPLANTDO NOTHING$0$0$0$06. (15) 20. Some personnel in management believe there is a 10 percent chance that the marketwill be EXCELLENT, a 40 percent chance that it will be GOOD, a 30 percent chance the marketwill be FAIR, and a 20 percent chance that it will be POOR. A market research firm will analyzemarket conditions and will provide a perfect forecast (they provide a money back guarantee).What is the most that should be paid for this forecast? NOTE: You need to compute theEXPECTED VALUE OF PERFECT INFORMATION (EVPI) after computing EMV for eachdecision alternative and finding the best EMV without hiring the market research firm.(Show) all computations for EMV, as well as computations for EVWPI and EVPI.

Your company, Drones, INC, must decide on their path forward in regard to new or expanded facilities for drone production. The table below shows the potential profits/osses for each decision alternative in each of 4 market conditions (states of nature). Note that the numbers in red (with a minus sign) are losses. NOTE: I have provided some extra columns and rows for your computations. NOTE THAT THE OBJECTIVE IS TO MAXIMIZE PROFIT. STATES OF NATURE FOR POTENTIAL MARKETS FOR DRONES DECISION EXCELLENT GOOD FAIR POOR ALTERNATIVES 6 OPEN 2 NEW $600,000 $400,000 -$200,000 $500,000 PLANTS FOR PRODUCTION OPEN 1 NEW PLANT FOR $200,000 $100,000 $300,000 $500,000 PRODUCTION $150,000 $75,000 $0 -$100,000 EXPAND CURRENT PLANT DO NOTHING $0 $0 $0 $0

Your company, Drones, INC, must decide on their path forward in regard to new or expanded facilities for drone production. The table below shows the potential profits/osses for each decision alternative in each of 4 market conditions (states of nature). Note that the numbers in red (with a minus sign) are losses. NOTE: I have provided some extra columns and rows for your computations. NOTE THAT THE OBJECTIVE IS TO MAXIMIZE PROFIT. STATES OF NATURE FOR POTENTIAL MARKETS FOR DRONES DECISION EXCELLENT GOOD FAIR POOR ALTERNATIVES 6 OPEN 2 NEW $600,000 $400,000 -$200,000 $500,000 PLANTS FOR PRODUCTION OPEN 1 NEW PLANT FOR $200,000 $100,000 $300,000 $500,000 PRODUCTION $150,000 $75,000 $0 -$100,000 EXPAND CURRENT PLANT DO NOTHING $0 $0 $0 $0

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section13.4: Multiple Regression Models

Problem 12P

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