5. Given the following payoff table with profit values and probabilities: States of Nature Decision Altermatives Make Product, dị Buy Product, d2 Do Nothing, dy Probability Low Demand, SI -$ 20,000 S 10, 000 $ 5,000 High Demand, s2 $ 90,000 S 70,000 $ 5,000 0.75 0.25 The optimal solution, for these values and probabilities, is to Buy Product (d2) with
5. Given the following payoff table with profit values and probabilities: States of Nature Decision Altermatives Make Product, dị Buy Product, d2 Do Nothing, dy Probability Low Demand, SI -$ 20,000 S 10, 000 $ 5,000 High Demand, s2 $ 90,000 S 70,000 $ 5,000 0.75 0.25 The optimal solution, for these values and probabilities, is to Buy Product (d2) with
A First Course in Probability (10th Edition)
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ISBN:9780134753119
Author:Sheldon Ross
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![5. Given the following payoff table with profit values and probabilities:
States of Nature
Decision Alternatives
Make Product, di
Buy Product, d2
Do Nothing, ds
Probability
Low Demand, Si
-$ 20,000
S 10, 000
$ 5,000
High Demand, s2
$ 90,000
$ 70,000
$ 5,000
0.75
0.25
The optimal solution, for these values and probabilities, is to Buy Product (d2) with](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1203fa0e-b229-4f50-85be-f468f21a13d9%2F0739821e-55e1-49eb-a629-00fcd3249d13%2Fj6go1x_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5. Given the following payoff table with profit values and probabilities:
States of Nature
Decision Alternatives
Make Product, di
Buy Product, d2
Do Nothing, ds
Probability
Low Demand, Si
-$ 20,000
S 10, 000
$ 5,000
High Demand, s2
$ 90,000
$ 70,000
$ 5,000
0.75
0.25
The optimal solution, for these values and probabilities, is to Buy Product (d2) with
![EVWOPI = $55,000, based on:
%3D
$12,500 2,5 00 Best
EV(Make) =
EV(Buy) =
$55,000 <<< Best
EV(Nothing) = $5,000
Perform the sensitivity analysis for the:
a Probability values, Be sure to include the graph on the back.
b. Payoff values.
+67](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1203fa0e-b229-4f50-85be-f468f21a13d9%2F0739821e-55e1-49eb-a629-00fcd3249d13%2Fqbws3kh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:EVWOPI = $55,000, based on:
%3D
$12,500 2,5 00 Best
EV(Make) =
EV(Buy) =
$55,000 <<< Best
EV(Nothing) = $5,000
Perform the sensitivity analysis for the:
a Probability values, Be sure to include the graph on the back.
b. Payoff values.
+67
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