Bakery Products is considering the introduction of a new line of products. In order to produce the new line, the bakery is considering either a major or minor renovation of the current plant. Bakery Products has the option of not developing the new line at all. The decision alternatives are shown in the payoff table below as well as the states of nature and probabilities. Payoffs are profits; States of Nature with Profits ($) Decision Alternatives Favourable (F) Neutral Market (U) Unfavourable (U) Major Renovation Minor Renovation $10,000 $5,000 $0 $4,000 $2,000 $0 - $9,000 - $2,000 $0 Do Nothing Probability 0.3 0.4 0.3 Before making the final decision, Bakery Products can pay a market research firm $500.00 to survey consumer attitudes towards the company's products. The results can be either “vibrant" or “limp". The reliability of the company, based on past performance, is given below. Conditional Probability For A Given state of nature Survey Results Vibrant (V) Limp (L) Favourable (F) Neutral Market (N) Unfavourable (U) 0.80 0.60 0.30 0.20 0.40 0.70 That is: P(V|F) = 0.80;P(V|N) = 0.60;P(V|U) = 0.30; P(LF) = 0.20;P(L|N) = 0.40;P(L|U) = 0.70; After vou have computed the revised probabilities round to two decimal places a) Construct the appropriate decision tree to help Bakery products make the appropriate decisions. This tree must be constructed in logical order with labels and net payoffs includes the revised probabilities ( b) Fold back the decision tree state this strategy c) What is the expected value of sample information (EVSI)- the most that ine suivey values?( \ It also to determine the best strategy for the bakery; you must What is the final expected profit?
Bakery Products is considering the introduction of a new line of products. In order to produce the new line, the bakery is considering either a major or minor renovation of the current plant. Bakery Products has the option of not developing the new line at all. The decision alternatives are shown in the payoff table below as well as the states of nature and probabilities. Payoffs are profits; States of Nature with Profits ($) Decision Alternatives Favourable (F) Neutral Market (U) Unfavourable (U) Major Renovation Minor Renovation $10,000 $5,000 $0 $4,000 $2,000 $0 - $9,000 - $2,000 $0 Do Nothing Probability 0.3 0.4 0.3 Before making the final decision, Bakery Products can pay a market research firm $500.00 to survey consumer attitudes towards the company's products. The results can be either “vibrant" or “limp". The reliability of the company, based on past performance, is given below. Conditional Probability For A Given state of nature Survey Results Vibrant (V) Limp (L) Favourable (F) Neutral Market (N) Unfavourable (U) 0.80 0.60 0.30 0.20 0.40 0.70 That is: P(V|F) = 0.80;P(V|N) = 0.60;P(V|U) = 0.30; P(LF) = 0.20;P(L|N) = 0.40;P(L|U) = 0.70; After vou have computed the revised probabilities round to two decimal places a) Construct the appropriate decision tree to help Bakery products make the appropriate decisions. This tree must be constructed in logical order with labels and net payoffs includes the revised probabilities ( b) Fold back the decision tree state this strategy c) What is the expected value of sample information (EVSI)- the most that ine suivey values?( \ It also to determine the best strategy for the bakery; you must What is the final expected profit?
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:Bakery Products is considering the introduction of a new line of products. In order to produce the new
line, the bakery is considering either a major or minor renovation of the current plant. Bakery Products
has the option of not developing the new line at all. The decision alternatives are shown in the payoff
table below as well as the states of nature and probabilities. Payoffs are profits;
States of Nature with Profits ($)
Decision Alternatives
Favourable (F)
Neutral Market (U)
Unfavourable (U)
Major Renovation
Minor Renovation
$10,000
$5,000
$0
$4,000
$2,000
$0
- $9,000
- $2,000
$0
Do Nothing
Probability
0.3
0.4
0.3
Before making the final decision, Bakery Products can pay a market research firm $500.00 to survey
consumer attitudes towards the company's products. The results can be either “vibrant" or “limp". The
reliability of the company, based on past performance, is given below.
Conditional Probability
For A Given state of nature
Survey Results
Vibrant (V)
Limp (L)
Favourable (F)
Neutral Market (N)
Unfavourable (U)
0.80
0.60
0.30
0.20
0.40
0.70
That is: P(V|F) = 0.80;P(V|N) = 0.60;P(V|U) = 0.30; P(LF) = 0.20;P(L|N) = 0.40;P(L|U) = 0.70;
After vou have computed the revised probabilities round to two decimal places
a) Construct the appropriate decision tree to help Bakery products make the appropriate decisions.
This tree must be constructed in logical order with labels and net payoffs
includes the revised probabilities (
b) Fold back the decision tree
state this strategy
c) What is the expected value of sample information (EVSI)- the most that ine suivey values?(
\ It also
to determine the best strategy for the bakery; you must
What is the final expected profit?
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