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Calculate expected value of the choice of alternative and advise the management.

Calculate expected value of the choice of alternative and advise the management.

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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The management is faced with the problem of choosing one of the products for manufacturing. The probability matrix after market research for the two products was as follows: State of nature Acts Good Fair Poor Product 'A' 0.75 0.15 0.10 Product 'B' 0.60 0.30 0.10 The profits that the management can make for different levels of market acceptability of the products are as follows : Profit (in Rs.) if market is Acts Good Fair Poor 35,000 15,000 5,000 Product 'A' Product 'B' 50,000 20,000 Loss 3,000 Calculate expected value of the choice of alternative and advise the management.
Transcribed Image Text:The management is faced with the problem of choosing one of the products for manufacturing. The probability matrix after market research for the two products was as follows: State of nature Acts Good Fair Poor Product 'A' 0.75 0.15 0.10 Product 'B' 0.60 0.30 0.10 The profits that the management can make for different levels of market acceptability of the products are as follows : Profit (in Rs.) if market is Acts Good Fair Poor 35,000 15,000 5,000 Product 'A' Product 'B' 50,000 20,000 Loss 3,000 Calculate expected value of the choice of alternative and advise the management.
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