Tropical Bliss wants to use an event to promote its new products. The company will however need to decide regarding the location and venue to use for the launch of its exiting new product line. They have developed a payoff table for three locations: Montego-Bay, Kingston, and Mandeville, and have also identified three states of nature (the crowd response / turn-out) Large, Moderate and Low: Payoffs are profits $000 Crowd Response (State of Nature) Locations Large Moderate Low Montego Bay 850 440 -85 Kingston 750 480 -20 Mandeville 650 550 110 A. What location should Tropical Bliss choose if the MaxiMax criterion is used? B. What location should Tropical Bliss choose if the LaPlace criterion is used? C. Using the MaxiMin criterion, which location should Tropical Bliss choose? D. If the probability of getting out a large crowd is 43%, the probability of getting out a moderate size crowd is 22%, and the probability of getting out a small crowd is 35%. Using expected monetary values, what decision should be made by Tropical Bliss and what is that optimal expected value? E. Construct the appropriate decision tree to help Tropical Bliss make the appropriate decisions. This tree must be constructed in logical order with labels and net payoffs. F. Calculate the Expected Value of Perfect Information for the profit.
Tropical Bliss wants to use an event to promote its new products. The company will however need to decide regarding the location and venue to use for the launch of its exiting new product
line. They have developed a payoff table for three locations: Montego-Bay, Kingston, and Mandeville, and have also identified three states of nature (the crowd response / turn-out) Large,
Moderate and Low:
| Payoffs are profits $000 | |||
| Crowd Response (State of Nature) | |||
| Locations | Large | Moderate | Low |
| Montego Bay | 850 | 440 | -85 |
| Kingston | 750 | 480 | -20 |
| Mandeville | 650 | 550 | 110 |
A. What location should Tropical Bliss choose if the MaxiMax criterion is used?
B. What location should Tropical Bliss choose if the LaPlace criterion is used?
C. Using the MaxiMin criterion, which location should Tropical Bliss choose?
D. If the probability of getting out a large crowd is 43%, the probability of getting out a moderate size crowd is 22%, and the probability of getting out a small crowd is 35%.
Using expected monetary values, what decision should be made by Tropical Bliss and what is that optimal expected value?
E. Construct the appropriate decision tree to help Tropical Bliss make the appropriate
decisions. This tree must be constructed in logical order with labels and net payoffs.
F. Calculate the Expected Value of Perfect Information for the profit.
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