Moreno is the credit manager for the Fabritek, one of the largest textile supplier in the region. He is currently faced with the question of whether to extend $100,000 credit to a potential new customer, a dress manufacturer. Moreno has three categories for the credit-worthiness of a company: poor risk, average risk, and good risk, but he does not know which category fits this potential customer. Experience indicates that 30 percent of companies similar to this dress manufacturer are poor risks, 60 percent are average risks, and 10 percent are good risks. If credit is extended, the expected profit for poor risks is -$30,000, for average risks $15,000, and for good risks $25,000. If credit is not extended, the dress manufacturer will turn to another supplier. Moreno is able to consult a credit-rating organization for a fee of $X per company evaluated. For companies whose actual credit record turns out to fall into each of the three categories, the following table shows the percentages that were given each of the three possible credit evaluations by the credit-rating organization. Actual Credit Record Credit Evaluation Poor Average Good Poor Average Good 50% 40% 10% 40% 50% 10% 20% 40% 40% What is the maximum amount Moreno should pay as a consulting fee for the credit- rating organization?
Moreno is the credit manager for the Fabritek, one of the largest textile supplier in the region. He is currently faced with the question of whether to extend $100,000 credit to a potential new customer, a dress manufacturer. Moreno has three categories for the credit-worthiness of a company: poor risk, average risk, and good risk, but he does not know which category fits this potential customer. Experience indicates that 30 percent of companies similar to this dress manufacturer are poor risks, 60 percent are average risks, and 10 percent are good risks. If credit is extended, the expected profit for poor risks is -$30,000, for average risks $15,000, and for good risks $25,000. If credit is not extended, the dress manufacturer will turn to another supplier. Moreno is able to consult a credit-rating organization for a fee of $X per company evaluated. For companies whose actual credit record turns out to fall into each of the three categories, the following table shows the percentages that were given each of the three possible credit evaluations by the credit-rating organization. Actual Credit Record Credit Evaluation Poor Average Good Poor Average Good 50% 40% 10% 40% 50% 10% 20% 40% 40% What is the maximum amount Moreno should pay as a consulting fee for the credit- rating organization?
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:Moreno is the credit manager for the Fabritek, one of the largest textile supplier in
the region. He is currently faced with the question of whether to extend $100,000
credit to a potential new customer, a dress manufacturer. Moreno has three
categories for the credit-worthiness of a company: poor risk, average risk, and good
risk, but he does not know which category fits this potential customer. Experience
indicates that 30 percent of companies similar to this dress manufacturer are poor
risks, 60 percent are average risks, and 10 percent are good risks. If credit is
extended, the expected profit for poor risks is -$30,000, for average risks $15,000,
and for good risks $25,000. If credit is not extended, the dress manufacturer will
turn to another supplier. Moreno is able to consult a credit-rating organization for a
fee of $X per company evaluated. For companies whose actual credit record turns
out to fall into each of the three categories, the following table shows the
percentages that were given each of the three possible credit evaluations by the
credit-rating organization.
Actual Credit Record
Credit Evaluation
Poor
Average
Good
Poor
Average
Good
50%
40%
10%
40%
50%
10%
20%
40%
40%
What is the maximum amount Moreno should pay as a consulting fee for the credit-
rating organization?
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