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ands of dollars) are shown. ative High Demand $1 60 80 100 E) = 0.70 V) = 0.30 begin State of Nature Medium Demand $2 60 80 70 r probabilities for the three states of nature are 0.3, 0.3, and 0.4, respectiv e recommended order quantity? P(S₁E) = 0.34 P(s₂|E) = 0.32 P(S3E) = 0.34 pro Low Deman $3 50 30 10 preseason sales meeting, the vice president of sales provides a pers egarding potential demand for this product. Because of the vice preside m and optimistic nature, the predictions of market conditions have alw er "excellent" (E) or "very good" (V). Probabilities are as follows: P(s₁|V) = 0.20 P(S₂|V) = 0.26 P(S3|V) = 0.54 he optimal decision strategy? ficiency of sample information and discuss whether the firm should cons ng expert who could provide independent forecasts of market condition ct.

ands of dollars) are shown. ative High Demand $1 60 80 100 E) = 0.70 V) = 0.30 begin State of Nature Medium Demand $2 60 80 70 r probabilities for the three states of nature are 0.3, 0.3, and 0.4, respectiv e recommended order quantity? P(S₁E) = 0.34 P(s₂|E) = 0.32 P(S3E) = 0.34 pro Low Deman $3 50 30 10 preseason sales meeting, the vice president of sales provides a pers egarding potential demand for this product. Because of the vice preside m and optimistic nature, the predictions of market conditions have alw er "excellent" (E) or "very good" (V). Probabilities are as follows: P(s₁|V) = 0.20 P(S₂|V) = 0.26 P(S3|V) = 0.54 he optimal decision strategy? ficiency of sample information and discuss whether the firm should cons ng expert who could provide independent forecasts of market condition ct.

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.6: Summarizing Categorical Data
Problem 11CYU
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22. Lawson's Department Store faces a buying decision for a seasonal product for which demand can be high, medium, or low. The purchaser for Lawson's can order one, two, or three lots of the product before the season begins but cannot reorder later. Profit projec- tions (in thousands of dollars) are shown. Decision Alternative Order 1 lot, d₁ Order 2 lots, d₂ Order 3 lots, d High Demand $1 P(E)= 0.70 P(V) = 0.30 60 80 100 State of Nature Medium Demand $2 60 80 70 a. If the prior probabilities for the three states of nature are 0.3, 0.3, and 0.4, respectively, what is the recommended order quantity? b. At each preseason sales meeting, the vice president of sales provides a personal opinion regarding potential demand for this product. Because of the vice president's enthusiasm and optimistic nature, the predictions of market conditions have always been either "excellent" (E) or "very good" (V). Probabilities are as follows: P(S₁E) = 0.34 P(S₂E) = 0.32 P(S3E) = 0.34 Low Demand $3 50 30 10 P(s₁|V) = 0.20 P(S₂|V) = 0.26 P(s3|V) = 0.54 What is the optimal decision strategy? c. Use the efficiency of sample information and discuss whether the firm should consider a consulting expert who could provide independent forecasts of market conditions for the product.
Transcribed Image Text:22. Lawson's Department Store faces a buying decision for a seasonal product for which demand can be high, medium, or low. The purchaser for Lawson's can order one, two, or three lots of the product before the season begins but cannot reorder later. Profit projec- tions (in thousands of dollars) are shown. Decision Alternative Order 1 lot, d₁ Order 2 lots, d₂ Order 3 lots, d High Demand $1 P(E)= 0.70 P(V) = 0.30 60 80 100 State of Nature Medium Demand $2 60 80 70 a. If the prior probabilities for the three states of nature are 0.3, 0.3, and 0.4, respectively, what is the recommended order quantity? b. At each preseason sales meeting, the vice president of sales provides a personal opinion regarding potential demand for this product. Because of the vice president's enthusiasm and optimistic nature, the predictions of market conditions have always been either "excellent" (E) or "very good" (V). Probabilities are as follows: P(S₁E) = 0.34 P(S₂E) = 0.32 P(S3E) = 0.34 Low Demand $3 50 30 10 P(s₁|V) = 0.20 P(S₂|V) = 0.26 P(s3|V) = 0.54 What is the optimal decision strategy? c. Use the efficiency of sample information and discuss whether the firm should consider a consulting expert who could provide independent forecasts of market conditions for the product.
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