subject: Quantitative Analysis For Business Please answer both. 22. Dawn owns a dog day care company that offers kenneling services for dogs that weigh less than 30 pounds. Dawn has decided to expand the building that houses the kennels by 1,000 square feet. A friend suggested that Dawn consider three expansion options: 1) only board dogs under 30 pounds; 2) only board dogs larger than 30 pounds; or 3) split the new space, allocating 50% to dogs under 30 pounds and 50% to dogs over 30 pounds. Expansion Options Strong Economy Weak Economy Likelihood 40% Likelihood 60% Only dogs under 30 pounds $19,000 increase in revenue $18,000 increase in revenue Only large dogs $22,000 increase in revenue $15,000 increase in revenue Split the space between small and large dogs $20,000 increase in revenue $16,000 increase in revenue Based on the table shown above, which option has the highest expected value? Splitting the space between small and large dogs, with a payout of $17,600 Using the expansion only dogs under 30 pounds, with a payout of $18,400 Using the expansion only for large dogs, with a payout of $17,800 Using the expansion only for large dogs, with a payout of $18,500 23. A company offers tax preparation services through a chain of 30 small offices in Kansas. Susan, the VP of marketing, has proposed adding an online app to target college students who want to start a business while they are still in school. According to Susan's data, there has been a 200% increase in new small businesses licensed to owners aged 18 to 22 years. The company has a small information technology (IT) department that has neither the time nor the expertise to build such an app. Therefore, three alternatives are being considered: 1) Outsource the work to an app development company to build the app 2) Sign up as a client of a company that already offers this type of app 3) Expand the IT department by hiring a programmer to develop the app Susan has put together the following table to show the company's estimated profit in the first two years for each alternative. Use the table to calculate the expected value. Alternative Decline in trend Likelihood: 50% Continuing trend Likelihood: 50% Outsource the work $4,000 $9,000 Sign up with an app $3,000 $6,000 Hire a programmer -$4,000 $18,000 What is the highest expected value? $13,000 $11,000 $4,500 $7,000
subject: Quantitative Analysis For Business
Please answer both.
22. Dawn owns a dog day care company that offers kenneling services for dogs that weigh less than 30 pounds. Dawn has decided to expand the building that houses the kennels by 1,000 square feet. A friend suggested that Dawn consider three expansion options: 1) only board dogs under 30 pounds; 2) only board dogs larger than 30 pounds; or 3) split the new space, allocating 50% to dogs under 30 pounds and 50% to dogs over 30 pounds.
|
Expansion Options |
Strong Economy |
Weak Economy |
|
Likelihood 40% |
Likelihood 60% |
|
|
Only dogs under 30 pounds |
$19,000 increase in revenue |
$18,000 increase in revenue |
|
Only large dogs |
$22,000 increase in revenue |
$15,000 increase in revenue |
|
Split the space between small and large dogs |
$20,000 increase in revenue |
$16,000 increase in revenue |
Based on the table shown above, which option has the highest expected value?
- Splitting the space between small and large dogs, with a payout of $17,600
- Using the expansion only dogs under 30 pounds, with a payout of $18,400
- Using the expansion only for large dogs, with a payout of $17,800
- Using the expansion only for large dogs, with a payout of $18,500
23. A company offers tax preparation services through a chain of 30 small offices in Kansas. Susan, the VP of marketing, has proposed adding an online app to target college students who want to start a business while they are still in school. According to Susan's data, there has been a 200% increase in new small businesses licensed to owners aged 18 to 22 years. The company has a small information technology (IT) department that has neither the time nor the expertise to build such an app. Therefore, three alternatives are being considered:
1) Outsource the work to an app development company to build the app
2) Sign up as a client of a company that already offers this type of app
3) Expand the IT department by hiring a programmer to develop the app
Susan has put together the following table to show the company's estimated profit in the first two years for each alternative. Use the table to calculate the expected value.
|
Alternative |
Decline in trend Likelihood: 50% |
Continuing trend Likelihood: 50% |
|
Outsource the work |
$4,000 |
$9,000 |
|
Sign up with an app |
$3,000 |
$6,000 |
|
Hire a programmer |
-$4,000 |
$18,000 |
What is the highest expected value?
- $13,000
- $11,000
- $4,500
- $7,000
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