c) Which investment level should the marketing department choose if they want tomaximize expected values? Assume that the probability that the market share isless than 1% is 0.3, that the probability that market share is between 1 and 4% is0.5, 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 themaximum amount they should be willing to spend to get more information about themarket share?Your answer:Your steps/process to get to the answer: To solve:LowHighThe marketing department of a soft drink company wishes to determine themaximum expected payoff from introducing a new crystal-clear drink. Thedepartment considers two investment levels ("Low" and "High") to choose betweenand regards market share as the key uncertainty that determines ultimate payoffs.These payoffs, depending on the choice of investment level and possible marketShare, are given in the table belowInvestment Level< 1%300,000-300,000Market Share1% -4%400,000300,000a) Which investment level should the marketing department choose if they areextremely 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 tominimize maximum regret?Your answer:Your steps/process to get to the answer:> 4%450,0002,000,000

NOTE: We are allowed to do the first three sub-parts only. Optimistic decision-making is a method…

Answered: a) Which investment level should the…

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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