The decision facing MBA is whether or not to put out the movie "Claws" on a limited first run basis. This means that the movie will show only in a few select theaters during the first six months. After six months it will be released generally. If the movie turns out to be a success, this is clearly the best approach because the studio makes considerable profit from these theaters. The other alternative is to release the film for wide distribution immediately. The profits for the two alternatives are given in the table below, classified in terms of whether the film is a "smash", or "medium" success, or a "flop". Profits from Film "Claws" Level of Success Smash Medium Probability 0.3 0.4 Limited Initial Release (in millions) 22 8 Widespread Release (in millions) 12 8

The decision facing MBA is whether or not to put out the movie "Claws" on a limited first run basis. This means that the movie will show only in a few select theaters during the first six months. After six months it will be released generally. If the movie turns out to be a success, this is clearly the best approach because the studio makes considerable profit from these theaters. The other alternative is to release the film for wide distribution immediately. The profits for the two alternatives are given in the table below, classified in terms of whether the film is a "smash", or "medium" success, or a "flop". Profits from Film "Claws" Level of Success Smash Medium Probability 0.3 0.4 Limited Initial Release (in millions) 22 8 Widespread Release (in millions) 12 8

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 8P: Video Tech is considering marketing one of two new video games for the coming holiday season: Battle...

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Suppose you are evaluating two companies: a hotel chain that owns real estate properties in key downtown locations and near airports as well as in resort areas; and a software startup which, on a very limited budget, has put together a strong team of programmers and designers. Which of these two companies is likely to have proportionally higher dead-weight bankruptcy/liquidation costs? In other words, which company will lose a higher percentage of its value if bankruptcy occurs, thus leaving little for investors to recover during liquidation? A. The hotel chain. B. The software start-up. C. There should be no difference between the two.
One of the most powerful people in Hollywood is not an actor, director, or producer. It is Richard Soames, an insurance director for the London-based Film Finances Ltd. Soames is a leading provider of movie completion bond guarantees. The guarantees are like insurance policies that pay the extra costs when films go over budget or are not completed on time. Suppose that Soames is considering insuring the production of a movie and feels there is a 0.65 chance that his company will make $80,000 on the deal (i.e., the production will be on time and not exceed budget). He believes there is a 0.35 chance that the movie will exceed budget and his company will lose $120,000, which would have to be paid to complete production. Soames could pay a movie industry expert $5,000 for an evaluation of the project’s success. He believes that the expert’s conclusions are true 90% of the time. What should Soames do? Q
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Because the company is in a start-up stage, corporate management feels that the East sales territory is creating too much of a cash drain on the company and it should be eliminated. If East is discontinued, one sales manager (whose salary is P40,000 per year) will be relocated to the West territory. By how much would Opal’s income decrease if the East territory is eliminated?
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As a start-up company, Oriole Enterprises encourages its employees to think through the entire value chain to estimate whether it might be worthwhile to take a risk on new products. As part of that program, Sharon is reviewing a product concept that her intern presented to her. The basic idea is to use a common process, which would result in two intermediate products. One product could be sold right away (X). The other product (Y) would have no immediate sales value but after further processing would yield a very high- value product. Sharon is intrigued enough to dig further into her intern's quantitative analysis, as follows. Sales value of X immediately after the joint process Sales value of Y after further processing Product X's share of the joint process cost Proportion of joint cost allocated to Product Y (a) Your answer is correct. (b) Based on this information, determine which joint cost allocation method the intern must have used when allocating the joint costs to these…
Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.
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Suisan Fish Company must decide whether to build a small or a large warehouse at a new location, Kona. Demand at Kona can be either low or high, with probabilities estimated to be 0.4 and 0.6, respectively. If a small warehouse is built, and demand is high, the fish manager may choose to maintain the current size or to expand. The net present value of profits is $220,000 if the company chooses not to expand. However, if the firm chooses to expand, there is a 50% chance that the net present value of the returns will be $330,000 and a 50% chance the estimated net present value of profits will be $220,000. If a small warehouse is built and demand is low, there is no reason to expand and the net present value of the profits is $210,000. However, if a large warehouse is built and the demand turns out to be low, the choice is to do nothing with a net present value of $25,000 or to stimulate demand through local advertising. The response to advertising can be either modest with a probability…
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