a) Two new product designs are to be compared on the basis of revenue potential. Marketing feels that the revenue from design A can be predicted quite accurately to be $3 million. The revenue potential of design B is more difficult to access. Marketing concludes that there is a probability of 0.3 that the revenue from design B will be $7 million, but there is a 0.7 probability that the revenue will be only $2 million. Which design do you prefer?

a) Two new product designs are to be compared on the basis of revenue potential. Marketing feels that the revenue from design A can be predicted quite accurately to be $3 million. The revenue potential of design B is more difficult to access. Marketing concludes that there is a probability of 0.3 that the revenue from design B will be $7 million, but there is a 0.7 probability that the revenue will be only $2 million. Which design do you prefer?

Name: a) Two new product designs are to be compared on the basis of revenue
Uploaded: 2024-03-20T07:06:41.000Z
Channel: Bartleby
Description: a) Two new product designs are to be compared on the basis of revenue potential.Marketing feels that the revenue from design A can be predicted quite accurately tobe $3 million. The revenue potential of design B is more difficult to access.Marketing

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...

See similar textbooks

Similar questions

Ultimate Gaming is trying to figure out which game they should release next quarter among four possible games. There is uncertainty when it comes to projecting profitability since it depends on the state of the gaming market 6 months in the future. A profit estimate is provided for good v. bad gaming market for the four possible games. UG estimates that the market will be good with a 65% chance. Alternatives| Bad Market | Good Market Game 1. 4.1 5.8 Game 2 2.5 7.1 Game 3 5.4 4.9 Game 4 4.5 5.3 UG believes that a game turning into a blockbuster is related to pre-release marketing events. Each event results in a success (blockbuster) or a loss (regular profitbility). UG has 6 marketing events and believes there is a 15% chance of success and having a block buster. What are the chances that exactly 2 of the events will result in a blockbuster? What…
Charlie buys a one-year term home insurance policy for $p, that will pay $200,000 in the event of a major catastrophe and $35,000 in the event of a minor catastrophe. Charlie's home has a 0.2% chance of a major catastrophe and a 0.7% of a minor catastrophe during the one year term. What did the insurance company charge Charlie for this policy if the company expected to break even?
An investment counselor calls with a hot stock tip. He believes that if the economy remains strong, the investment will result in a profit of $40,000. If the economy grows at a moderate pace, the investment will result in a profit of $10,000. However, if the economy goes into recession, the investment will result in a loss of $40,000. You contact an economist who believes there is a 20% probability the economy will remain strong, a 70% probability the economy will grow at a moderate pace, and a 10% probability the economy will slip into recession. What is the expected profit from this investment?
See photo for details...Need help with Part B
The proprietor of Midland Construction Company has to decide between two projects. He estimates that the first project will yield a profit of $180,000 with a probability of 0.7 or a profit of $130,000 with a probability of 0.3; the second project will yield a profit of $220,000 with a probability of 0.7 or a profit of $80,000 with a probability of 0.3.Find the expected profit for each project. first project $ second project $
A investor estimates that, in a year’s time, a certain stock has a 30% chance to be worth $125 per share, a 45% chance to be worth $90 per share, and a 25% chance to be worth$60 per share. Determine the expectation of the price per share of the stock in a year’s time.
Bob, the proprietor of Midway Lumber, bases his projections for the annual revenues of the company on the performance of the housing market. He rates the performance of the market as very strong, strong, normal, weak, or very weak. For the next year, Bob estimates that the probabilities for these outcomes are 0.15, 0.25, 0.39, 0.09, and 0.12, respectively. He also thinks that the revenues corresponding to these outcomes are $23, $18.6, $16.9, $14, and $6 million, respectively. What is Bob's expected revenue for next year?
The proprietor of Midland Construction Company has to decide between two projects. He estimates that the first project will yield a profit of $160,000 with a probability of 0.7 or a profit of $120,000 with a probability of 0.3; the second project will yield a profit of $220,000 with a probability of 0.6 or a profit of $70,000 with a probability of 0.4.Find the expected profit for each project. first project $ second project $ Which project should the proprietor choose if he wants to maximize his expected profit? first project second project
Suppose an oil company is thinking of buying some land for $10,000,000. There is a 60%60% chance of economic growth and a 40%40% chance of recession. The probability of discovering oil is 44%44% when there is economic growth and 32%32% when there is a recession. If there is economic growth and the oil company discovers oil, the value of the land will triple. If they do not discover oil, the value of the land will decrease by 10%.10%. If there is a recession and the company discovers oil, the value of the land will increase by 50%.50%. If they do not discover oil, the land will decrease in value by 75%.75%. What is the expected value of the investment? Give your answer to the nearest dollar. Avoid rounding within calculations. $$ Select the correct interpretation of the expected value. The expected value represents what the actual investment value will be for this land purchase of $10,000,000. The company should make the investment because the expected value…
In a recent year, the percentage of patients at a doctor's office who received a flu shot was 60%. A campaign by the doctors and nurses was designed to increase the percentage of patients who obtain a flu shot. The doctors and nurses believed there was an 80% chance that someone who received a shot in year 1 would obtain a shot in year 2. They also believed that there was a 40% chance that a person who did not receive a shot in year 1 would receive a shot in year 2. Complete parts (a) through (c) below. (a) Give the transition matrix for this situation. Set up the transition matrix P so that the first row and first column represent obtaining a flu shot and the second row and second column represent not obtaining a flu shot. P = (Type an integer or decimal for each matrix element.)
Vivian is deciding whether or not to prepare a tender for a job. The cost of producing the tender will be $1600, which will apply even if her company does not win the tender. Vivian has done some quick calculations and currently thinks that there is a 0.57 probability that the cost is $7000, and otherwise the cost is $10400. These costs do not include the cost of producing the tender. She also believes that the probability that the lowest bid submitted by any competing company will be $8800 is 0.35, that the probability that the lowest bid submitted by any competing company will be $16400 is 0.32, and otherwise that the lowest bid submitted by any competing company will be $12400 Vivian is considering whether she should bid $10800, bid $14400, or not bid. You may assume independence between the probabilities that Vivian assigns to her estimated costs of the project and the probabilities of her assumed lowest bids of competing companies. Thus if She submits a price of $14400 then the…
You have done risk analysis and determine the following risks and their probabilities could affect your project. Based on these risks, what should you contingency reserve be? Risk 1: 50% chance of a weather delay costing $5,000Risk 2: 20% chance of a worker strike costing $10,000Risk 3: 10% chance of catastrophic failure costing $50,000