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B eBook The J.R. Ryland Computer Company considering a plant expansion to enable the company to begin production of a new computer product. The company's president must determine whether to make the expansion a medium- or large- scale project. Demand for the new product is uncertain, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for demand are 0.20, 0.20, and 0.60, respectively. Letting x and y indicate the annual profit in thousands of dollars, the firm's planners developed the following profit forecasts for the medium- and large-scale expansion projects. Demand Low Medium High Medium-Scale Expansion Profit f(x) 0.20 0.20 0.60 X 50 150 200 Large-Scale Expansion Profit y f(y) 0 0.20 100 0.20 300 0.60 (a) Compute the expected value for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. EV Medium-Scale Large-Scale Which decision is preferred for the objective of maximizing the expected profit? Select your answer - (b) Compute the variance for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. Var Medium-Scale Large-Scale Which decision is preferred for the objective of minimizing the risk or uncertainty? - Select your answer

B eBook The J.R. Ryland Computer Company considering a plant expansion to enable the company to begin production of a new computer product. The company's president must determine whether to make the expansion a medium- or large- scale project. Demand for the new product is uncertain, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for demand are 0.20, 0.20, and 0.60, respectively. Letting x and y indicate the annual profit in thousands of dollars, the firm's planners developed the following profit forecasts for the medium- and large-scale expansion projects. Demand Low Medium High Medium-Scale Expansion Profit f(x) 0.20 0.20 0.60 X 50 150 200 Large-Scale Expansion Profit y f(y) 0 0.20 100 0.20 300 0.60 (a) Compute the expected value for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. EV Medium-Scale Large-Scale Which decision is preferred for the objective of maximizing the expected profit? Select your answer - (b) Compute the variance for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. Var Medium-Scale Large-Scale Which decision is preferred for the objective of minimizing the risk or uncertainty? - Select your answer

Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter5: Probability: An Introduction To Modeling Uncertainty
Section: Chapter Questions
Problem 18P: The J.R. Ryland Computer Company is considering a plant expansion to enable the company to begin...
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BO eBook The J.R. Ryland Computer Company is considering a plant expansion to enable the company to begin production of a new computer product. The company's president must determine whether to make the expansion a medium- or large- scale project. Demand for the new product is uncertain, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for demand are 0.20, 0.20, and 0.60, respectively. Letting x and y indicate the annual profit in thousands of dollars, the firm's planners developed the following profit forecasts for the medium- and large-scale expansion projects. Demand Low Medium High Medium-Scale Expansion Profit f(x) 0.20 X 50 150 200 0.20 0.60 Large-Scale Expansion Profit y f(y) 0.20 0.20 0.60 0 100 300 (a) Compute the expected value for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. EV Medium-Scale Large-Scale Which decision is preferred for the objective of maximizing the expected profit? Select your answer - ✓ (b) Compute the variance for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. Var Check My Work (4 remaining) Medium-Scale Large-Scale Which decision is preferred for the objective of minimizing the risk or uncertainty? - Select your answer - ✓
Transcribed Image Text:BO eBook The J.R. Ryland Computer Company is considering a plant expansion to enable the company to begin production of a new computer product. The company's president must determine whether to make the expansion a medium- or large- scale project. Demand for the new product is uncertain, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for demand are 0.20, 0.20, and 0.60, respectively. Letting x and y indicate the annual profit in thousands of dollars, the firm's planners developed the following profit forecasts for the medium- and large-scale expansion projects. Demand Low Medium High Medium-Scale Expansion Profit f(x) 0.20 X 50 150 200 0.20 0.60 Large-Scale Expansion Profit y f(y) 0.20 0.20 0.60 0 100 300 (a) Compute the expected value for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. EV Medium-Scale Large-Scale Which decision is preferred for the objective of maximizing the expected profit? Select your answer - ✓ (b) Compute the variance for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. Var Check My Work (4 remaining) Medium-Scale Large-Scale Which decision is preferred for the objective of minimizing the risk or uncertainty? - Select your answer - ✓
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