UG can only properly release a limited number of games, even though they have a number of candidates in development. They are trying to figure out which game they should release next quarter among four possibilities (and in so doing, gain some insight into how to make such decisions in the future). There is some uncertainty as the projected profitability of the release depends on the state of the gaming market 6 months in the future. Based on their experience, UG has provided an estimate of profit for a “good” gaming market and a “bad” gaming market for the four candidate games (see below). Even with these estimates, though, UG managers are unsure which game to choose. UG managers consider themselves to be optimistic about the future but would like to consider a large variety of ways to make this decision. When asked how likely they think it is that the market will be good, UG said “about a 65% chance”. UG mentioned that they are curious about “opportunity loss”, but they have no idea what this means or how to incorporate it into their decision-making process. UG also noted that they could pay for market forecasts that will help predict good and bad markets, but they have not done so in the past. They would like some help deciding whether to purchase the forecasts. Profit (in millions) Alternatives Bad Market Good Market Game 1 4.1 5.8 Game 2 2.5 7.1 Game 3 5.4 4.9 Game 4 4.5 5.3 Assistance on bold question is needed.

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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UG can only properly release a limited number of games, even though they have a number of candidates in development. They are trying to figure out which game they should release next quarter among four possibilities (and in so doing, gain some insight into how to make such decisions in the future). There is some uncertainty as the projected profitability of the release depends on the state of the gaming market 6 months in the future. Based on their experience, UG has provided an estimate of profit for a “good” gaming market and a “bad” gaming market for the four candidate games (see below). Even with these estimates, though, UG managers are unsure which game to choose. UG managers consider themselves to be optimistic about the future but would like to consider a large variety of ways to make this decision. When asked how likely they think it is that the market will be good, UG said “about a 65% chance”. UG mentioned that they are curious about “opportunity loss”, but they have no idea what this means or how to incorporate it into their decision-making process. UG also noted that they could pay for market forecasts that will help predict good and bad markets, but they have not done so in the past. They would like some help deciding whether to purchase the forecasts.

Assistance on bold question is needed.

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