A First Course in Probability (10th Edition)
10th Edition
ISBN: 9780134753119
Author: Sheldon Ross
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Related questions
Question
- UG can only properly release a limited number of games, even though they have a number of candidates in development. They are trying to figure out which game they should release next quarter among four possibilities (and in so doing, gain some insight into how to make such decisions in the future). There is some uncertainty as the projected profitability of the release depends on the state of the gaming market 6 months in the future. Based on their experience, UG has provided an estimate of profit for a “good” gaming market and a “bad” gaming market for the four candidate games (see below). Even with these estimates, though, UG managers are unsure which game to choose. UG managers consider themselves to be optimistic about the future but would like to consider a large variety of ways to make this decision. When asked how likely they think it is that the market will be good, UG said “about a 65% chance”. UG mentioned that they are curious about “opportunity loss”, but they have no idea what this means or how to incorporate it into their decision-making process. UG also noted that they could pay for market forecasts that will help predict good and bad markets, but they have not done so in the past. They would like some help deciding whether to purchase the forecasts.
Assistence on bolded statement above is needed.
|
Profit (in millions) |
||
|
Alternatives |
Bad Market |
Good Market |
|
Game 1 |
4.1 |
5.8 |
|
Game 2 |
2.5 |
7.1 |
|
Game 3 |
5.4 |
4.9 |
|
Game 4 |
4.5 |
5.3 |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps
Knowledge Booster
Similar questions
- Keystone can only properly market a limited number of properties. They are trying to figure out which property they should select to add to their portfolio among four candidates (and in so doing, gain some insight into how to make such decisions in the future). There is some uncertainty as the selling price (and therefore commission/profit) depends on the state of the real estate market 6 months in the future. Based on their experience, Keystone has provided an estimate of selling prices for a “good” real estate market and a “bad” real estate market for the four candidate properties (see Table 1). Table 1: Sales price (in millions of $) Alternatives Bad Market Good Market Property 1 2.1 3.7 Property 2 1.7 3.8 Property 3 2.8 2.6 Property 4 2.2 2.4 Even with these estimates, though, Keystone managers are unsure which property to choose. Keystone managers consider themselves to be optimistic about the future, but would like to…arrow_forwardA real estate company, Peterson & Johnson, discusses five potential development projects.The following table shows the estimated long-term earnings (net present value) that each project would generate and the investment required to undertake it, in millions of dollars.Company owners Dave Peterson and Ron Johnson raised $20 million in investment capital for these projects. They want to choose the mix of projects that maximizesthe total estimated long-term profit (net present value) without investing more than $20 million. a) Formulate a PEB model for this problem.arrow_forwardTwo employees (Molly and Jim) must conduct a data analysis project on the success of a firm’s marketing efforts and then write a report of their findings for consideration by the firm’s board. If the first employee, Molly, worked completely alone, she could finish the data analysis component of the project with 30 hours of work and could write the report with an additional 10 hours of work. If Jim worked alone, he would take 48 hours of work to conduct the data analysis and then 12 hours to write the report. Assume that both employees need to contribute to the project, that there would be no benefits to having two people work on the same part of the project (data analysis and writing), and that working on the two parts are independent (i.e. there is no benefit to working on both parts). Which employee has the comparative advantage in conducting the data analysis? Explainarrow_forward
- The Vintage Restaurant, on Captiva Island near Fort Myers, Florida, is owned and operated by Karen Payne. The restaurant just completed its third year of operation. Since opening her restaurant, Karen has sought to establish a reputation for the Vintage as a high-quality dining establishment that specializes in fresh seafood. Through the efforts of Karen and her staff, her restaurant has become one of the best and fastest growing restaurants on the island. To better plan for future growth of the restaurant, Karen needs to develop a system that will enable her to forecast food and beverage sales by month for up to one year in advance. Table 17.25 shows the value of food and beverage sales ($1000s) for the first three years of operation. Dependent variable: What is the variable: ___________________________________________ How it is measured, i.e. what units or categories are used (e.g., revenue measured in “dollars”; height measured as “short, average, tall”)…arrow_forwardA national study found that treating people appropriately for high blood pressure reduced their overall mortality by 20%. Treating people adequately for hypertension has been diffcult because it is estimated that 50% of hypertensives do not know they have high blood pressure, 50% of those who do know are inadequately treated by their physicians, and 50% who are appropriately treated fail to follow this treatment by taking the right number of pills. Answer the following questions ( please answer all the parts 1,2 and 3): 1) What is the probability that among 10 true hypertensives at least 50% are being treated appropriately and are complying with this treatment?2) What is the probability that at least 7 of the 10 hypertensives know they have high blood pressure? 3) If the preceding 50% rates were each reduced to 40% by a massive education program, then what effect would this change have on the overall mortality rate among true hypertensives; that is, would the mortality rate decrease…arrow_forwardUG can only properly release a limited number of games, even though they have a number of candidates in development. They are trying to figure out which game they should release next quarter among four possibilities (and in so doing, gain some insight into how to make such decisions in the future). There is some uncertainty as the projected profitability of the release depends on the state of the gaming market 6 months in the future. Based on their experience, UG has provided an estimate of profit for a “good” gaming market and a “bad” gaming market for the four candidate games (see below). Even with these estimates, though, UG managers are unsure which game to choose. UG managers consider themselves to be optimistic about the future but would like to consider a large variety of ways to make this decision. When asked how likely they think it is that the market will be good, UG said “about a 65% chance”. UG mentioned that they are curious about “opportunity loss”, but they have…arrow_forward
- Elaine Benes is considering three possible ways to invest the $200,000 she has just inherited. Some of Elaine’s friends are considering financing a combined laundromat, video-game arcade, and pizzeria, where the young singles in the area can meet and play while doing their laundry. This venture is highly risky and could result in either a major loss or a substantial gain within a year. Elaine estimates that the chances of losing all the money (i.e. loss of $200,000) are 47%, while the chances of making a $200,000 profit are 53%. Elaine can invest in some new apartments that are being built in town. Within 1 year, this fairly conservative project will produce a profit of at least $10,000, but it might yield $20,000 or even $30,000. Elaine estimates the probabilities of these yields at 20%, 50%, and 30% respectively. Elaine can invest in some private securities that have a current yield of 5%. Construct (draw) a decision tree for Elaine to determine which investment will maximize her…arrow_forwardAlthough investing all at once works best when stock prices are rising, dollar-cost averaging can be a good way to take advantage of a fluctuating market. Dollar-cost averaging is an investment strategy designed to reduce volatility in which securities are purchased in fixed dollar amounts at regular intervals regardless of what direction the market is moving. This strategy is also called the constant dollar plan. You are considering a hypothetical $1,200 investment in a media company's stock. Your choice is to invest the money all at once or dollar-cost average at the rate of $100 per month for one year. Assume that the company allows you to purchase "fractional" shares of its stock. (a) If you invested all of the money in January and bought the shares for $12 each, how many shares could you buy? shares (b) From the following chart of share prices, calculate the number of shares that would be purchased each month using dollar-cost averaging and the total shares for the year.…arrow_forwardThe Harriet Hotel in downtown Boston has 100 rooms that rent for $150 per night. It costs the hotel $30 per room in variable costs (cleaning, bathroom items, etc.) each night a room is occupied. For each reservation accepted, there is a 5% chance that the guest will not arrive. If the hotel overbooks, it costs $200 to compensate guests whose reservations cannot be honored. How many reservations should the hotel accept if it wants to maximize the average daily profit?arrow_forward
- A citrus grower anticipates a profit of $100,000 this year if the nightly temperatures remain mild. Unfortunately, the weather forecast indicates a 25% chance that the temperatures will drop below freezing during the next week. Such freezing weather will destroy 40% of the crop and reduce the profit to $60,000. However, the grower can protect the citrus fruit against the possible freezing (using smudge pots, electric fans, and so on) at a cost of $5000. Should the grower spend the $5000 and thereby reducethe profit to $95,000? [Hint: Compute E(X ), where X is theprofit the grower will get if he does nothing to protect the fruit.]arrow_forwardNetflix made headlines in September 2011 when it split its streaming video service and its DVD by-mail service into two companies. This decision was based on projections that streaming videos will replace DVDs in the future. In this problem, you will explore these projections. Numbers below are close to the correct values, but vary to allow more practice with this idea. Total DVD and Blu-ray disc sales in 2009 were $8.72 billion. For the purposes of this problem, you will combine DVD and Blue-ray disk sales into one category of DVD sales. A study by In-Stat predicted that "physical disc sales will decline by $4.7 billion by 2014," and that "streaming, on the other hand, should grow from its current $2.1 billion to $6.3 billion over the same time period (2009–2014)." What is the slope, including units, of the model for streaming videos?arrow_forwardYou are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the accompanying table. \table[[Project, Boom (50%), Recession (50%) A $20 - $10 be - $10, $20 C $30 $30 D $50 - $50 Options A900 B225 Czero D1600arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- A First Course in Probability (10th Edition)ProbabilityISBN:9780134753119Author:Sheldon RossPublisher:PEARSON
A First Course in Probability (10th Edition)
Probability
ISBN:9780134753119
Author:Sheldon Ross
Publisher:PEARSON