Chapter 14, Problem 17QP

A company is researching the effectiveness of a new website design to decrease the time to access a website. 32 website users were randomly selected, and their time (in seconds) to access the website with the old and new designs were recorded. The summary statistics for the two sets of data are given in Table Q3-1, and the test results are given in Table Q3-2 and Q3-3. Apply an appropriate hypothesis testing method to test whether the new website design can decrease the time to access the website at the significance level of 5%.

The company is considering whether or not they should drill the land. The cost of drilling is estimated to be $4 million. The company believes there are three possible findings after drilling the land: dry, wet and gushing. The probabilities for these outcomes are 0.5, 0.3 and 0.2, respectively. If the land is found to be dry, it obviously offers no profit. If the land is wet, it brings a potential profit of $10 million. If gushing, the potential profit from the land is $30 million. Answer the following questions, Q1 and Q2. Q1: Draw a decision tree to show the decision for this company based on the EMV criterion. Nodes and arcs are provided below and you can make more of them by using "copy" and "paste" Q2: The company has the option of using some new technology and equipment combined with seismic survey data to learn the presence of oil (dry, wet or gushing) before drilling the land. However, it requires $2.3 million investment for the technology, equipment, and required analysis. Is…

The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): Decision    State of Nature   Alternative Low Demand (S1) Medium Demand (S2) High Demand )S3) Manufacture, d(1) -20 40 100 Purchase, d(2) 10 45 70 The state-of-nature probabilities are P s1= 0.35, P s2= 0.35, and P s3= 0.30 Use expected value to recommend a decision.

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At a hydrocarbon processing factory, process control involves periodic analysis of samples for a certain process quality parameter. The analytic procedure currently used is costly and time consuming. A faster and more economical alternative procedure has been proposed. However, the numbers for the quality parameter given by the alternative procedure are somewhat different from those given by the current procedure, not because of any inherent errors but because of changes in the nature of the chemical analysis. Management believes that if the numbers from the new procedure can be used to forecast reliably the corresponding numbers from the current procedure, switching to the new procedure would be reasonable and cost effective. The following data were obtained for the quality parameter by analyzing samples using both procedures: Current (Y) 2.8 Current (Y) ITTT Proposed (X) 3.2 Proposed (X) 3.1 3.1 3.7 38 2.6 3.0 2.8 3.5 4.0 3.3 3.6 3.6 3.4 4.0 3.6 3.7 2.1 2.6 2.7 3.6 3.2 3.2 3.3 3.5…

At a hydrocarbon processing factory, process control involves periodic analysis of samples for a certain process quality parameter. The analytic procedure currently used is costly and time consuming. A faster and more economical alternative procedure has been proposed. However, the numbers for the quality parameter given by the alternative procedure are somewhat different from those given by the current procedure, not because of any inherent errors but because of changes in the nature of the chemical analysis. Management believes that if the numbers from the new procedure can be used to forecast reliably the corresponding numbers from the current procedure, switching to the new procedure would be reasonable and cost effective. The following data were obtained for the quality parameter by analyzing samples using both procedures: Current (Y) 2.9 3.0 3.3 3.6 4.0 2.7 3.1 Proposed (X) 3.0 3.8 3.5 4.0 3.7 3.6 3.7 Current (Y) 3.1 2.9 3.3 2.9 2.1 3.2 2.8 The increases in X mostly result in how…

Letz Products has two decisions to make, with the second decision dependent on the outcomeof the first. The company intends to build a new plant. Letz has the option of conducting itsown marketing research survey for which the results will either be positive or negative. Theinformation from this survey could help it decide whether to build a large plant, to build a smallplant, or not to build at all. Letz recognizes that although such a survey will not provide it withperfect information, it may be extremely helpful.    Using the image explain to your client (Letz) what the above decision tree shows. You arerequired to show all working.

Molly e-mailed her clients offering a free 30-minute massage for referrals. In the following validation set of 100, Class 1 reflects the clients predicted to provide referrals and Class O reflects the clients predicted to not provide referrals. Based on the confusion matrix, what was the True Positive (TP) of current clients who provided referrals for a free massage? Actual Class Predicted Class 1 Predicted Class 0. Class 1 Class 0 Multiple Choice 28 63 19 9 9 63