STAT TECH IN BUSINESS & ECON AC
18th Edition
ISBN: 9781264731657
Author: Lind
Publisher: MCG
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Chapter 20, Problem 4E
To determine
Construct an opportunity loss table.
Find the opportunity loss for each decision.
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please show all your steps (including decision trees)
A concessions manager at the Tech versus A&M football game must decide whether to have the
vendors sell sun visors or umbrellas. There is a 30% chance of rain, a 15% chance of overcast
skies, and a 55% chance of sunshine, according to the weather forecast in College Junction, where
the game is to be held. The manager estimates that the following profits will result from each
decision, given each set of weather conditions:
Weather Conditions
Rain
Sunshine
Overcast
.15
Decision
.03
.55
Sun visors
$-500
$-200
$1,500
Umbrellas
2,000
-900
a. Compute the expected value for each decision, and select the best one.
b. Develop the opportunity loss table, and compute the expected opportunity loss for each
decision.
A survey by the Arthur Andersen Enterprise attempted to determine what the leading challenges are for the growth and survival of small businesses. Although the economy and finding qualified workers were the leading challenges, several others were listed in the results of the study, including regulations, listed by 30% of the companies, and the tax burden, listed by 35%. Suppose that 71% of the companies listing regulations as a challenge also listed the tax burden as a challenge. Assume these percentages hold for all small businesses.
1. If a small business is randomly selected, find the following probabilities:
(a) The small business lists either the tax burden or regulations as a challenge.
(b) The small business lists either the tax burden or regulations but not both as a challenge.
(c) The small business does not list regulations as a challenge given that it lists the tax burden as a challenge.
(d) The small business does not list regulations as a challenge given that it does not…
Chapter 20 Solutions
STAT TECH IN BUSINESS & ECON AC
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