GCC Ltd. owns GCC motors which is considering the introduction of a new electric car engine for 4- seater cars. There is a 50% chance that the engine will be successful in the market. The company may consider trying out the product in a test market, for £5 million, before deciding to introduce the car engine. Experience shows that ultimately successful products are approved in the test market 80 percent of the time, whereas ultimately unsuccessful products are approved in the test market only 25 percent of the time. If the product is successful, the net profit to the company will be £40 million; if unsuccessful, the net loss will be £15 million. Managerial report: Perform a decision analysis of the problem facing GCC and prepare a report that summarises your findings, recommendations and critical appraisal. Include the following information in your report • a decision tree that shows the logical sequence of the decision problem and all formulas and detailed calculations involved in the tree, • a recommendation or the set of recommendations of a course of action(s) to GCC, • a critical appraisal.
GCC Ltd. owns GCC motors which is considering the introduction of a new electric car engine for 4- seater cars. There is a 50% chance that the engine will be successful in the market. The company may consider trying out the product in a test market, for £5 million, before deciding to introduce the car engine. Experience shows that ultimately successful products are approved in the test market 80 percent of the time, whereas ultimately unsuccessful products are approved in the test market only 25 percent of the time. If the product is successful, the net profit to the company will be £40 million; if unsuccessful, the net loss will be £15 million.
Managerial report: Perform a decision analysis of the problem facing GCC and prepare a report that summarises your findings, recommendations and critical appraisal.
Include the following information in your report
• a decision tree that shows the logical sequence of the decision problem and all formulas and detailed calculations involved in the tree,
• a recommendation or the set of recommendations of a course of action(s) to GCC,
• a critical appraisal.
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