Sushow Inc. is a show company that makes an average of $400,000 from a good show and loses an average of $100,000 on a flop. Of the shows the network analyzes, 25% turn out to be hits and 75% turn out to be flops. For $40 000, a market research firm will ask an audience to watch a pilot of a likely show and give their views on whether the show will be a hit or a flop. If the show is actually going to be a success, there is a 90% chance that the market research firm will predict that the show will be a success. If the show is actually going to be a failure, there is an 80% chance that the market research firm will predict that the show will be a failure. will be a failure. a) Which decisions would maximize profits for Sushow? b) Calculate the VEIP c) Calculate the VEIE.
Sushow Inc. is a show company that makes an average of $400,000 from a good show and loses an average of $100,000 on a flop. Of the shows the network analyzes, 25% turn out to be hits and 75% turn out to be flops. For $40 000, a market research firm will ask an audience to watch a pilot of a likely show and give their views on whether the show will be a hit or a flop. If the show is actually going to be a success, there is a 90% chance that the market research firm will predict that the show will be a success. If the show is actually going to be a failure, there is an 80% chance that the market research firm will predict that the show will be a failure. will be a failure. a) Which decisions would maximize profits for Sushow? b) Calculate the VEIP c) Calculate the VEIE.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Sushow Inc. is a show company that makes an average of $400,000 from a good show and loses an average of $100,000 on a flop. Of the shows the network analyzes, 25% turn out to be hits and 75% turn out to be flops. For $40 000, a
will be a failure.
a) Which decisions would maximize profits for Sushow?
b) Calculate the VEIP
c) Calculate the VEIE.
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