A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows: What is the probability that the market research report will be favorable?
A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows: What is the probability that the market research report will be favorable?
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter1: Fundamental Concepts Of Algebra
Section1.3: Algebraic Expressions
Problem 20E
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Question
The XY Manufacturing Company must decide whether to manufacture acomponent part at its 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 ten thousand of pesos):
State of Nature | State of Nature | State of Nature | |
Decision Alternative | Low Demand S_(1) |
Medium Demand S_(2) |
High Demand S_(3) |
Manufacture, d_(1) | -100 | 200 | 500 |
Purchase, d_(2) | 50 | 225 | 350 |
The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3
) = 0.30.
c. A test market study of the potential demand for the product is expected to report
either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows:
What is the probability that the market research report will be favorable?
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