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3. A company is comparing two new product designs (design A and design B) based on their revenue potential. The revenue from design A is anticipated to be $2.5 million, by marketing department. But they find it difficult to accurately predict the potential revenue of design B. Marketing concludes that there is a probability of 0.3 that the revenue from design B will be $5 million and 0.3 probability that the revenue will be $4 million. But there are also risks of no revenue or even $1 million loss from this design with probabilities of 0.3 and 0.1, respectively. a) How much do you expect the long-term revenue of design B will be? b) Which design do you think is the more reasonable choice? Show your calculations and clearly explain the reason for your choice of design.

3. A company is comparing two new product designs (design A and design B) based on their revenue potential. The revenue from design A is anticipated to be $2.5 million, by marketing department. But they find it difficult to accurately predict the potential revenue of design B. Marketing concludes that there is a probability of 0.3 that the revenue from design B will be $5 million and 0.3 probability that the revenue will be $4 million. But there are also risks of no revenue or even $1 million loss from this design with probabilities of 0.3 and 0.1, respectively. a) How much do you expect the long-term revenue of design B will be? b) Which design do you think is the more reasonable choice? Show your calculations and clearly explain the reason for your choice of design.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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3. A company is comparing two new product designs (design A and design B) based on their revenue potential. The revenue from design A is anticipated to be $2.5 million, by marketing department. But they find it difficult to accurately predict the potential revenue of design B. Marketing concludes that there is a probability of 0.3 that the revenue from design B will be $5 million and 0.3 probability that the revenue will be $4 million. But there are also risks of no revenue or even $1 million loss from this design with probabilities of 0.3 and 0.1, respectively. a) How much do you expect the long-term revenue of design B will be? b) Which design do you think is the more reasonable choice? Show your calculations and clearly explain the reason for your choice of design.
Transcribed Image Text:3. A company is comparing two new product designs (design A and design B) based on their revenue potential. The revenue from design A is anticipated to be $2.5 million, by marketing department. But they find it difficult to accurately predict the potential revenue of design B. Marketing concludes that there is a probability of 0.3 that the revenue from design B will be $5 million and 0.3 probability that the revenue will be $4 million. But there are also risks of no revenue or even $1 million loss from this design with probabilities of 0.3 and 0.1, respectively. a) How much do you expect the long-term revenue of design B will be? b) Which design do you think is the more reasonable choice? Show your calculations and clearly explain the reason for your choice of design.
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