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a) Which investment level should the marketing department choose if they are extremely optimistic about the market share? Your answer: Your steps/process to get to the answer: b) Which investment level should the marketing department choose if they want to minimize maximum regret? Your answer: Your steps/process to get to the answer:

a) Which investment level should the marketing department choose if they are extremely optimistic about the market share? Your answer: Your steps/process to get to the answer: b) Which investment level should the marketing department choose if they want to minimize maximum regret? Your answer: Your steps/process to get to the answer:

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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c) Which investment level should the marketing department choose if they want to maximize expected values? Assume that the probability that the market share is less than 1% is 0.3, that the probability that market share is between 1 and 4% is 0.5, and that the probability that market share is more than 4% is 0.2. Your answer: Your steps/process to get to the answer: d) If the marketing department wants o maximize expected values, what is the maximum amount they should be willing to spend to get more information about the market share? Your answer: Your steps/process to get to the answer:
Transcribed Image Text:c) Which investment level should the marketing department choose if they want to maximize expected values? Assume that the probability that the market share is less than 1% is 0.3, that the probability that market share is between 1 and 4% is 0.5, and that the probability that market share is more than 4% is 0.2. Your answer: Your steps/process to get to the answer: d) If the marketing department wants o maximize expected values, what is the maximum amount they should be willing to spend to get more information about the market share? Your answer: Your steps/process to get to the answer:
To solve: Low High The marketing department of a soft drink company wishes to determine the maximum expected payoff from introducing a new crystal-clear drink. The department considers two investment levels ("Low" and "High") to choose between and regards market share as the key uncertainty that determines ultimate payoffs. These payoffs, depending on the choice of investment level and possible market Share, are given in the table below Investment Level < 1% 300,000 -300,000 Market Share 1% -4% 400,000 300,000 a) Which investment level should the marketing department choose if they are extremely optimistic about the market share? Your answer: Your steps/process to get to the answer: b) Which investment level should the marketing department choose if they want to minimize maximum regret? Your answer: Your steps/process to get to the answer: > 4% 450,000 2,000,000
Transcribed Image Text:To solve: Low High The marketing department of a soft drink company wishes to determine the maximum expected payoff from introducing a new crystal-clear drink. The department considers two investment levels ("Low" and "High") to choose between and regards market share as the key uncertainty that determines ultimate payoffs. These payoffs, depending on the choice of investment level and possible market Share, are given in the table below Investment Level < 1% 300,000 -300,000 Market Share 1% -4% 400,000 300,000 a) Which investment level should the marketing department choose if they are extremely optimistic about the market share? Your answer: Your steps/process to get to the answer: b) Which investment level should the marketing department choose if they want to minimize maximum regret? Your answer: Your steps/process to get to the answer: > 4% 450,000 2,000,000
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