Before the board meeting the CEO obtained a market demand forecast report. in the past, when the demand was high, the forecast indicated high demand 80% of the time. When the demand was low, the forecast indicated low demand 70% of the time. The latest forecast indicates high demand. a Compute the revised probabilities with Bayes rule now that you know that the latest forecast indicates bigb demand. b. Interpret the impact of the latest forecast on the prior probabilities

Before the board meeting the CEO obtained a market demand forecast report. in the past, when the demand was high, the forecast indicated high demand 80% of the time. When the demand was low, the forecast indicated low demand 70% of the time. The latest forecast indicates high demand. a Compute the revised probabilities with Bayes rule now that you know that the latest forecast indicates bigb demand. b. Interpret the impact of the latest forecast on the prior probabilities

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

Related questions

Q: 1. You play a game in which 30% of the time you will WIN $5 and 70% of the time you will LOSE $3.…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: or large shop at a new location. Building a small shop will cost the owner P150,000 while building a…

A: See the handwritten solution

Q: Let X denote the diameter of cylindrical molds and Y denote the inside diameter of a given cable.…

A: The diameter of the cylindrical molds is X. The inside diameter of the cable is Y. The range of the…

Q: Sociologists say that 90% of married women claim that their husband's mother is the biggest bone of…

Q: An investment counselor calls with a hot stock tip. He believes that if the economy remains strong,…

Q: Sociologists say that 85% of married women claim that their husband's mother is the biggest bone of…

Q: An investment counselor calls with a hot stock tip. He believes that if the economy remains strong,…

A: Random variables are of 2 types, discrete and continuous. A discrete random variable can only take…

Q: Two different types of injection-molding machines are used to form plastic parts. A part is…

A: From the given information, let Xl be the number of defective parts found in the sample from machine…

Q: Redo exercises 15 and 16 in section 8.1 of your textbook, about the volume of securities sold by a…

A: i) P(High volume in next week | High volume in this week)=0.6 P(Low volume in next week | High…

Q: investment counselor calls with a hot stock tip. He believes that if the economy remains strong, the…

Q: uppose you play a game of chance where you roll a pair of dice. You pay a nonrefundable $2 to play…

A: If the number of pips on both dice is even, you win $6. Otherwise you win nothing

Q: Organizers of an outdoor summer concert in Toronto are concerned about the weather conditions on the…

A: From the provided information, Organisers make a profit of $24,000 on a clear day with probability…

Q: A rice importer has three sources: Thailand, Vietnam, and China. Unfortunately, the annual amount of…

A: Given information- We have given the tables which show probabilities of rice sold in tons and prices…

Q: K An investment counselor calls with a hot stock tip. He believes that if the economy remains…

A: Given: If the economy remains strong, the investment will result in a $40,000 profit with a…

Q: Sociologists say that 80% of married women claim that their husband's mother is the biggest bone of…

A: Solution: Note: Hello! As you have posted more than 3 sub parts, we are answering the first 3…

Q: A lawyer considering taking a case figures that there is a 40% chance of winning the case in court…

A: The expected payoff of the case for the firm is obtained below: From the given information, there is…

Q: A lottery posted the probabilities of winning each prize and the prize amounts as shown in the chart…

A: Suppose x is the prize amount from the lottery.

Q: Sociologists say that 80% of married women claim that their husband's mother is the biggest bone of…

Q: Consider all courtroom trials with a single de- fendant who is charged with a felony. Suppose that…

Q: n investment counselor calls with a hot stock tip. He believes that if the economy remains strong,…

A: Given the investment will result in a profit of $30,000. If the economy grows at a moderate pace,…

Q: An investment counselor calls with a hot stock tip. He believes that if the economy remains strong,…

Q: The accompanying table shows a bookstore's estimated demand for a new calendar. The bookstore needs…

A: The payoff table can be calculated by making a two-way table with columns representing the demand…

Q: Sociologists say that 90% of married women claim that their husband's mother is the biggest bone of…

A: Hi! Thanks for posting the question. Since there are more than three sub-part questions, we will…

Q: Bob, the proprietor of Midway Lumber, bases his projections for the annual revenues of the company…

A: Given that, For the next year, Bob estimates that the probabilities for these outcomes are 0.15,…

Q: You are working for a bank and your supervisor asked you to predict the default risk for cach of the…

Concept explainers

Compound Probability

Compound probability can be defined as the probability of the two events which are independent. It can be defined as the multiplication of the probability of two events that are not dependent.

Tree diagram

Probability theory is a branch of mathematics that deals with the subject of probability. Although there are many different concepts of probability, probability theory expresses the definition mathematically through a series of axioms. Usually, these axioms express probability in terms of a probability space, which assigns a measure with values ranging from 0 to 1 to a set of outcomes known as the sample space. An event is a subset of these outcomes that is described.

Conditional Probability

By definition, the term probability is expressed as a part of mathematics where the chance of an event that may either occur or not is evaluated and expressed in numerical terms. The range of the value within which probability can be expressed is between 0 and 1. The higher the chance of an event occurring, the closer is its value to be 1. If the probability of an event is 1, it means that the event will happen under all considered circumstances. Similarly, if the probability is exactly 0, then no matter the situation, the event will never occur.

Question

ve Aswe
The CEO must present a plan to the board whether to build a small plant or a large plant for the company. The payoff table (in S) is as follows:
Action
Event
Probability Small plant
Large plant
High demand 0.65
270
195
480
Low demand 0.35
100
Before the board meeting, the CEO obtained a market demand forecast report. in the past, when the demand was high, the forecast indicated high demand 80% of the
time. When the demand was low, the forecast indicated low demand 70% of the time. The latest forecast indicates high demand.
a. Compute the revised probabilities with Bayes' rule now that you know that the latest forecast indicates high demand.
b. Interpret the impact of the latest forecast on the prior probabilities

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

$Conditional Probability, Decision Trees, and Bayes' Theorem$

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, probability and related others by exploring similar questions and additional content below.

Similar questions

An investor in Microsoft is worried the latest management earnings forecast is too aggressive and the company will fall short. His favorite analyst that covers the company is going to release his report the week before the earnings announcement. The report stands for the analyst’s report and Forecast stands for the earnings announcement. Prior Probabilities Conditional Probabilities P(Good Report) = 0.2 P(Below Forecast | Good Report) = 0.1 P(Medium Report) = 0.5 P(Below Forecast | Medium Report) = 0.4 P(Bad Report) = 0.3 P(Below Forecast | Bad Report) = 0.9 What is the probability the earnings announcement is below the forecast? Briefly Discuss your result.
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, 0.23, 0.41, 0.10, and 0.11, respectively. He also thinks that the revenues corresponding to these outcomes are $25, $18.5, $16.8, $14, and $13 million, respectively. What is Bob's expected revenue for next year? (Round your answer to two decimal places.)$ million
Granny Maggie has been investing in government bonds and corporate stocks since her mid 30’s. Now, in her60s, she is interesting to try to invest in gold after receiving some advice from her friend. She would like toinvest in gold and is aware that the returns on such an investment can be quite volatile.Read carefully the following table of states, probabilities, and returns. Probability Return Boom 0.1 40.00 % Good 0.2 30.00% OK 0.3 15.00% Level 0.2 2.00% Slump 0.2 -12.00% You are asked to determine the expected return and the standard deviation of the return on Granny’s goldinvestment.
A consultant has been hired to redesign a company's production facility. The consultant estimates the probabilities of her potential profit as shown in the table below. What is her profit expectation? $ Profit/Loss $40,000 $30,000 $20,000 $10,000 $5,000 Probability 0.06 0.20 0.38 0.30 0.06
Sociologists say that 80% of married women claim that their husband's mother is the biggest bone of contention in their marriages (sex and money are lower-rated areas of contention). Suppose that ten married women are having coffee together one morning. Find the following probabilities. (For each answer, enter a number. Round your answers to three decimal places.) (a) All of them dislike their mother-in-law. (b) None of them dislike their mother-in-law. (c) At least eight of them dislike their mother-in-law. (d) No more than seven of them dislike their mother-in-law.
ociologists say that 95% of married women claim that their husband's mother is the biggest bone of contention in their marriages (sex and money are lower-rated areas of contention). Suppose that nine married women are having coffee together one morning. Find the following probabilities. (For each answer, enter a number. Round your answers to THREE decimal places.) (a) All of them dislike their mother-in-law. (b) None of them dislike their mother-in-law. (c) At least seven of them dislike their mother-in-law. (d) No more than six of them dislike their mother-in-law.
Sociologists say that 90% of married women claim that their husband's mother is the biggest bone of contention in their marriages (sex and money are lower-rated areas of contention). Suppose that seven married women are having coffee together one morning. Find the following probabilities. (For each answer, enter a number. Round your answers to three decimal places.) (a) All of them dislike their mother-in-law. (b) None of them dislike their mother-in-law. (c) At least five of them dislike their mother-in-law. (d) No more than four of them dislike their mother-in-law.
Sociologists say that 95% of married women claim that their husband's mother is the biggest bone of contention in their marriages (sex and money are lower-rated areas of contention). Suppose that seven married women are having coffee together one morning. Find the following probabilities. (For each answer, enter a number. Round your answers to three decimal places.) At least five of them dislike their mother-in-law. (d) No more than four of them dislike their mother-in-law.
Q15
A manager is building a simulation model to project future profits. A simulation model template is setup for the task. Simulated Revenue ? Simulated Simulated Material Cost ? Labor Profit Cost ? ? Question 1. She believes that the future revenue will be either $12M, $13M, or $14.5M depending on the future demand being low, medium, or high, respectively. According to her market analysis, the future demand will be low, medium, or high with a probability of 0.3, 0.5, and 0.2, respectively. What is the appropriate @Risk function, including its arguments, that reflects her belief about future revenue?
Organizers of an outdoor summer concert in Toronto are concerned about the weather conditions on the day of the concert. They will make a profit of $33,000 on a clear day and $15,000 on a cloudy day. They will make a loss of $7,000 if it rains. The weather channel has predicted a 52% chance of rain on the day of the concert. Calculate the expected profit from the concert if the likelihood is 11% that it will be sunny and 37% that it will be cloudy.
Sociologists say that 85% of married women claim that their husband's mother is the biggest bone of contention in their marriages (sex and money are lower-rated areas of contention). Suppose that seven married women are having coffee together one morning. Find the following probabilities. (For each answer, enter a number. Round your answers to three decimal places.) (a) All of them dislike their mother-in-law. (b) None of them dislike their mother-in-law. (c) At least five of them dislike their mother-in-law. (d) No more than four of them dislike their mother-in-law.