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 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. NÓTE 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 NEWPLANT FOR$200,000 -$100,000 -$300,000$500,000PRODUCTIONEΧPAND$150,000$75,000$0-$100,000CURRENTPLANTDO NOTHING$0$0$0$06.

The given information, it is clear that, Market conditions are, Excellent = 10% or 0.1 Good =40% or…

20. Some personnel in management believe there is a 10 percent chance that the market will be EXCELLENT, a 40 percent chance that it will be GOOD, a 30 percent chance the market will be FAIR, and a 20 percent chance that it will be PoOR. A market research firm will analyze market 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 the EXPECTED VALUE OF PERFECT INFORMATION (EVPI) after computing EMV for each decision 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.

20. Some personnel in management believe there is a 10 percent chance that the market will be EXCELLENT, a 40 percent chance that it will be GOOD, a 30 percent chance the market will be FAIR, and a 20 percent chance that it will be PoOR. A market research firm will analyze market 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 the EXPECTED VALUE OF PERFECT INFORMATION (EVPI) after computing EMV for each decision 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.

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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