The J.R. Ryland Computer Company is considering a plant expansion to enable the company to begin production of a new computer product. The company’s president must determine whether to make the expansion a medium- or large-scale project. Demand for the new product is uncertain, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for demand are 0.20, 0.10, and 0.70, respectively. Letting x and y indicate the annual profit in thousands of dollars, the firm’s planners developed the following profit forecasts for the medium- and large-scale expansion projects. Medium-Scale Expansion Profit Large-Scale Expansion Profit x f(x) y f(y) Demand Low 50 0.20 0 0.20 Medium 150 0.10 100 0.10 High 200 0.70 300 0.70 (a) Compute the expected value for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. EV Medium-Scale Large-Scale Which decision is preferred for the objective of maximizing the expected profit? - Select your answer -Medium-ScaleLarge-ScaleItem 3 (b) Compute the variance for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. Var Medium-Scale Large-Scale Which decision is preferred for the objective of minimizing the risk or uncertainty? - Select your answer -Medium-ScaleLarge-ScaleItem 6
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
The J.R. Ryland Computer Company is considering a plant expansion to enable the company to begin production of a new computer product. The company’s president must determine whether to make the expansion a medium- or large-scale project. Demand for the new product is uncertain, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for demand are 0.20, 0.10, and 0.70, respectively. Letting x and y indicate the annual profit in thousands of dollars, the firm’s planners developed the following profit forecasts for the medium- and large-scale expansion projects.
| Medium-Scale Expansion Profit | Large-Scale Expansion Profit | ||||||
| x | f(x) | y | f(y) | ||||
| Demand | Low | 50 | 0.20 | 0 | 0.20 | ||
| Medium | 150 | 0.10 | 100 | 0.10 | |||
| High | 200 | 0.70 | 300 | 0.70 |
| (a) | Compute the expected value for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. | ||||||
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| Which decision is preferred for the objective of maximizing the expected profit? | |||||||
| - Select your answer -Medium-ScaleLarge-ScaleItem 3 | |||||||
| (b) | Compute the variance for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. | ||||||
|
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| Which decision is preferred for the objective of minimizing the risk or uncertainty? | |||||||
| - Select your answer -Medium-ScaleLarge-ScaleItem 6 |
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