Option 2: Raise prices by 50%. If this occurs, there is a 75% chance that an Entrepreneur will set up in competition this year. The board’s estimate of its annual profit in this situation would be as follows: 2A: With new competitor                 2B: Without new competitor Probability Profit (Sh.)                 Probability Profit (Sh.) 0.25    150,000                                   0.5  200,000 0.5     120,000                                         0.3  150,000 0.25        80,000                                        0.2 100,000 Option 3: Expand the car park quickly at a cost of Sh. 50,000 keeping prices theSame. The profits are then estimated to be like 2B above, except that the probabilities would be 0.6, 0.3 and 0.1 respectively. Required: Draw a decision tree for the above problem, including all the relevant data. Using expected values analyze the decision tree and recommend the best option to the owners of the car park.

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Jeffrey Mogul is a Hollywood film producer, and he is currently evaluating a script by a new screenwriter and director, Betty Jo Thurston. Jeffrey knows that the probability of a film by a new director being a success is about .10 and that the probability it will flop is .90. The studio accounting department estimates that if this film is a hit, it will make $25 million in profit, whereas if it is a box office failure, it will lose $8 million. Jeffrey would like to hire noted film critic Dick Roper to read the script and assess its chances of success. Roper is generally able to correctly predict a successful film 70% of the time and correctly predict an unsuccessful film 80% of the time. Roper wants a fee of $1 million. Determine whether Roper should be hired, the strategy Mogul should follow if Roper is hired, and the expected value.

the EMV is....

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I posted this question and it's been 18 hours that it still hasn't been answered. I only need the last two questions please (:

A well-known plastic mould and die manufacturer in Toronto intends to expand internationally in anticipation of strong demand and expansion in the plastic die manufacturing sector. use the table beneath. Using the Maximax, Maximin, and equally likely conditions, assist the business in making the best option in an unclear situation. 0.5 for a highly favourable condition, 0.2 for an average demand, and 0.3 for an unfavourable state are the probabilities linked with the states of nature.a) Choose the course of action that will give Andrew the highest predicted monetary value (EMV).b) Determine the anticipated value of perfect information (EVPI).

An oil company must decide whether or not to drill an oil well in a particular area that they already own. The decision maker (DM) believes that the area could be dry, reasonably good or a bonanza. See data in the table which shows the gross revenues for the oil well that is found. Decision Drill $0 Abandon $0 Probability 0.3 Dry (D) Seismic Results No structure(N) Open(0) Closed (C) Drilling costs 40M. The company can take a series of seismic soundings (at a cost of 12M) to determine the underlying geological structure. The results will be either "no structure", "open structure or "closed structure". The reliability of the testing company is as follows that is, this reflects their historical performance. Reasonably good(G) $85 $0 0.3 Note that if the test result is "no structure" the company can sell the land to a developer for 50 m. otherwise (for the other results) it can abandon the drilling idea at no benefit to itself. Dry(d) 0.7 0.2 Bonanza(B) 0.1 $200 m SO 0.4 Conditional…

The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars):     State of Nature   Low Demand Medium Demand High Demand Decision Alternative s1 s2 s3 Manufacture, d1 -20 40 100 Purchase, d2 10 45 70   The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30.   Use a decision tree to recommend a decision.Recommended decision:    Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand.   EVPI: $  fill in the blank 3 A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows: P(F | s1) = 0.10   P(U | s1) = 0.90 P(F | s2) = 0.40   P(U |…

A company is considering whether to develop and market a particular product. There is 40% probability that the research and development department will come up with a viable product, and a 60% probability that the product will be scrapped. The cost of undertaking the research and development is 200 000. If the product development is successful, the company will build a plant. The product demand is unknown, and the company has the choice of building a large or small plant. The expected demand and the net present value is shown below:   High Demand Low Demand ACTION Probability 75% Probability 25% Large Plant N$1 600 000 N$400 000 Small Plant N$1 000 000 N$1 000 000 Required: Advise the company on the most beneficial course of action using a decision tree.