The computer-gaming market in the United States is estimated at $18.5 billion as of 2017 (VentureBeat website). Consider the case of Video Tech, a computer-gaming company located in San Jose, California. It is considering the production of one of two new video games for the coming holiday season: Battle Pacific or Space Pirates. Battle Pacific is a unique game and appears to have no competition. Estimated profits (in thousands of dollars) under high, medium, and low demand are as follows: Excel File: data20-05a.xls Demand Battle Pacific High Medium Low Profit $1,100 $800 $400 Probability 0.2 0.5 0.3 Video Tech is optimistic about its Space Pirates game. However, the concern is that profitability will be affected by a competitor's introduction of a video game viewed as similar to Space Pirates. For planning purposes, Video Tech believes there is a 0.7 probability that its competitor will produce a new game similar to Space Pirates. Estimated profits (in thousands of dollars) with and without competition are as follows: Excel File: data20-05b.xls Space Pirates Demand With Competition High Medium Low Profit $900 $500 $300 Probability 0.2 0.6 0.2 Excel File: data20-05c.xls Space Pirates Demand Without Competition High Medium Low Profit $1,350 $750 $450 Probability 0.6 0.3 0.1 a. Choose the correct decision tree for the Video Tech problem. A. B. C. - Select your answer - 1. Decision Tree A 2. Decision Tree B 3. Decision Tree C b. Given the probability of competition (0.7), the director of planning recommends marketing the Battle Pacific video game. Using expected value, what is your recommended decision? Round your answers to the nearest whole number. EV (Battle Pacific) = _______________ thousand dollars EV (Space Pirates) = _______________ thousand dollars - Select your answer - (Space Pirates, Battle Pacific) is recommended.
The computer-gaming market in the United States is estimated at $18.5 billion as of 2017 (VentureBeat website). Consider the case of Video Tech, a computer-gaming company located in San Jose, California. It is considering the production of one of two new video games for the coming holiday season: Battle Pacific or Space Pirates. Battle Pacific is a unique game and appears to have no competition. Estimated profits (in thousands of dollars) under high, medium, and low demand are as follows:
Excel File: data20-05a.xls
Demand
Battle Pacific High Medium Low
Profit $1,100 $800 $400
Probability 0.2 0.5 0.3
Video Tech is optimistic about its Space Pirates game. However, the concern is that profitability will be affected by a competitor's introduction of a video game viewed as similar to Space Pirates. For planning purposes, Video Tech believes there is a 0.7 probability that its competitor will produce a new game similar to Space Pirates. Estimated profits (in thousands of dollars) with and without competition are as follows:
Excel File: data20-05b.xls
Space Pirates Demand
With Competition High Medium Low
Profit $900 $500 $300
Probability 0.2 0.6 0.2
Excel File: data20-05c.xls
Space Pirates Demand
Without Competition High Medium Low
Profit $1,350 $750 $450
Probability 0.6 0.3 0.1
a. Choose the correct decision tree for the Video Tech problem.
A.
B.
C.
- Select your answer - 1. Decision Tree A 2. Decision Tree B 3. Decision Tree C
b. Given the probability of competition (0.7), the director of planning recommends marketing the Battle Pacific video game. Using expected value, what is your recommended decision? Round your answers to the nearest whole number.
EV (Battle Pacific) = _______________ thousand dollars
EV (Space Pirates) = _______________ thousand dollars
- Select your answer - (Space Pirates, Battle Pacific)
is recommended.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
