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A management is faced with the problem of choosing one of three products for manufacturing. The potential demand for each product may turn out to be good, moderate or poor. The probabilities for each of the state of nature were estimated as follows : Nature of Demand Product Good Moderate Рoor 0.7 0.2 0.1 Y 0.5 0.3 0.2 0.4. 0.5 0.1 The estimated profit or loss under the three states may be taken as : 30,000 20,000 10,000 Y 60,000 30,000 20,000 40,000 10,000 - 15,000 (loss) Prepare the expected value table and advise the management about the choice of product.

A management is faced with the problem of choosing one of three products for manufacturing. The potential demand for each product may turn out to be good, moderate or poor. The probabilities for each of the state of nature were estimated as follows : Nature of Demand Product Good Moderate Рoor 0.7 0.2 0.1 Y 0.5 0.3 0.2 0.4. 0.5 0.1 The estimated profit or loss under the three states may be taken as : 30,000 20,000 10,000 Y 60,000 30,000 20,000 40,000 10,000 - 15,000 (loss) Prepare the expected value table and advise the management about the choice of product.

College Algebra
College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter9: Counting And Probability
Section9.4: Expected Value
Problem 1E: If a game gives payoffs of $10 and $100 with probabilities 0.9 and 0.1, respectively, then the...
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A management is faced with the problem of choosing one of three products for manufacturing. The potential demand for each product may turn out to be good, moderate or poor. The probabilities for each of the state of nature wère estimated as follows : Nature of Demand Product Good Moderate Poor 0.7 0.2 0.1 Y 0.5 0.3 0.2 0.4. 0.5 0.1 The estimated profit or loss under the three states may be taken as : 30,000 20,000 10,000 Y 60,000 30,000 20,000 40,000 10,000 - 15,000 (loss) Prepare the expected value table and advise the management about the choice of product.
Transcribed Image Text:A management is faced with the problem of choosing one of three products for manufacturing. The potential demand for each product may turn out to be good, moderate or poor. The probabilities for each of the state of nature wère estimated as follows : Nature of Demand Product Good Moderate Poor 0.7 0.2 0.1 Y 0.5 0.3 0.2 0.4. 0.5 0.1 The estimated profit or loss under the three states may be taken as : 30,000 20,000 10,000 Y 60,000 30,000 20,000 40,000 10,000 - 15,000 (loss) Prepare the expected value table and advise the management about the choice of product.
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