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Flora Co wishes to find out how the outcome would change if the estimates for revenue relating to the expansion into home delivery service were different than originally forecast. Which of the following methods would be suitable for Flora Co to use in this evaluation? O Sensitivity analysis O Market research O Variance analysis O Focus groups

Flora Co wishes to find out how the outcome would change if the estimates for revenue relating to the expansion into home delivery service were different than originally forecast. Which of the following methods would be suitable for Flora Co to use in this evaluation? O Sensitivity analysis O Market research O Variance analysis O Focus groups

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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Quarter 2 Flora Co intends to expand the business to include a home delivery service. The delivery van is expected to cost $20,000 and the business has a 60% chance of the new delivery service being successful. The following decision tree has been produced to represent this decision. The final profit figures in the decision tree are based upon whether demand is good or poor for the new delivery service. Expand Cost of van ($20,000) Key D Don't expand Decision Outcome Success 0.6 Failure 0.4 A B Good 0.7 Poor 0.3 Good 0.2 Poor 0.8 $600,000 $100,000 $10,000 $8,000 $0
Transcribed Image Text:Quarter 2 Flora Co intends to expand the business to include a home delivery service. The delivery van is expected to cost $20,000 and the business has a 60% chance of the new delivery service being successful. The following decision tree has been produced to represent this decision. The final profit figures in the decision tree are based upon whether demand is good or poor for the new delivery service. Expand Cost of van ($20,000) Key D Don't expand Decision Outcome Success 0.6 Failure 0.4 A B Good 0.7 Poor 0.3 Good 0.2 Poor 0.8 $600,000 $100,000 $10,000 $8,000 $0
Flora Co wishes to find out how the outcome would change if the estimates for revenue relating to the expansion into home delivery service were different than originally forecast. Which of the following methods would be suitable for Flora Co to use in this evaluation? O Sensitivity analysis O Market research O Variance analysis O Focus groups
Transcribed Image Text:Flora Co wishes to find out how the outcome would change if the estimates for revenue relating to the expansion into home delivery service were different than originally forecast. Which of the following methods would be suitable for Flora Co to use in this evaluation? O Sensitivity analysis O Market research O Variance analysis O Focus groups
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