dt 13-9. A contractor spends Rs. 3,000 to prepare for a bid on a construction project which,after deducting manufacturing expenses and the cost of bidding, will yield a profit of Rs. 25,000 if the bid iswon. If the chance of winning the bid is ten per cent, compute his expected profit and state the likelydecision on whether to bid or not to bid.

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Answered: *de 13-9. A contractor spends Rs. 3,000…

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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If a game gives payoffs of $10 and $100 with probabilities 0.9 and 0.1, respectively, then the expected value of this game is E=0.9+0.1= .
Mike, a lumber wholesaler, is considering the purchase of a (railroad) car- load of varied dimensional lumber. He calculates that the probabilities of reselling the load for $10,000, $9000, and for $8000 are 0.22, 0.33, and 0.45 respectively. In order to ensure an expected profit of $3000, how much can Mike pay for the load
Hemmingway, Inc., is considering a $5 million research and development (R&D) project. Profit projections appear promising, but Hemmingway's president is concerned because the probability that the R&D project will be successful is only 0.50. Furthermore, the president knows that even if the project is successful, it will require that the company build a new production facility at a cost of $20 million in order to manufacture the product. If the facility is built, uncertainty remains about the demand and thus uncertainty about the profit that will be realized. Another option is that if the R&D project is successful, the company could sell the rights to the product for an estimated $25 million. Under this option, the company would not build the $20 million production facility. The decision tree is shown in Figure 4.16. The profit projection for each outcome is shown at the end of the branches. For example, the revenue projection for the high demand outcome is $59 million.…
In the study of evolutionary behavior, the Trivers-Willard hypothesis indicates that healthyparents should tend to have more male offspring than female, and that weaker parents should tendto have more female offspring than male. This tendency may maximize the number of each parent’sgrandchildren (and thus help to ensure that its genetic code is preserved) since a healthy maleoffspring can win many mates, but a relatively unhealthy offspring has the best chance of mating ifit is female. In an experiment to examine this hypothesis, a group of 40 opossums were monitoredand 20 of them were given an enhanced diet. After a certain period of time, the opossums with theenhanced diet had raised 19 male offspring and 14 female offspring, and the opossums without theenhanced diet had raised 15 male offspring and 15 female offspring. Does this finding provideevidence in support of the Trivers-Willard hypothesis? (a) Describe the unknown parameters ?1 and ?2. Then state the null and…
(b) A milk man buys milk at K10 per litre and sells it at K12 if sold on the same day; if not, it can be sold at K9 per litre the next day. Demand of milk lies between 45 litres and 60 litres per day and its probabilities are uniformly distributed over this demand. If each day’s demand is independent of the previous day’s demand, how many litres should be ordered every day?
4.) Consider an M/M/2 system with an arrival rate of 9 per minute and a service rate of 8 per minute. What is the probability a newly arriving customer will have to wait? Take your answer to three decimal places.
In bidding for a remodeling project, a carpenter determines that he will have a net profit of $5000 if he gets the contract and a net loss of $86 if his bid fails. If the probability of his getting the contract is .2, calculate his expected return.
There are two investments projects A and B each involving an initial investment of $2,000. The possible payoffs of investments A are $1,000, $2,000 and $3,000 with respective probabilities 0.20, 0.40, and 0.40, while the possible payoffs of investment B are $1,600, $2,000, and $2,750 with respective probabilities 0.25, 0.35, and 0.40. Calculate the expected value and the standard deviation of the payoff for each of the two investments.
A store manager observes that the morale of employees in her supermarket is low. She thinks that if their working conditions are improved, pay scales rose, and the vacation benefits made more attractive, the morale will be boosted. She doubts, however, if an increase in pay scales would raise the morale of all employees. Her conjecture is that those who have supplemental incomes will just not be “turned on” by higher pay, and only those without side incomes will be happy with increased pay, with a resultant boost in morale Based on the scenario presented, answer the following questions: A) Identify the Independent, Dependent, Moderating, and Mediating Variables. Also provide justification for your choice. B) Create a schematic diagram (i.e., conceptual framework) that depicts the relationships among the variables. C) Based on the above conceptual framework develops at least four alternate hypotheses.
Consider the following payoff matrix.
A firm must decide whether to construct a small, medium or large stamping plant. A consultant’s report indicates a 0.20 probability that demand will be low and 0.80 that demand will be high. If the firm builds a small facility and demand turns out to be low, the Net Present Value (NPV) will be $42M. If demand turns out to be high, the firm can either subcontract and realize the NPV of $42M or expand greatly for a Net Present Value of $48M. The firm could build a medium size facility as a hedge: if demand turns out to be low, its NPV is estimated at $22M; if demand turns out to be high, the firm could do nothing and realize a NPV of $46M, or could expand and realize a NPV of $50M. If the firm builds a large facility and demand is low, the NPV will be ($20M), whereas high demand will result in a NPV of $72M. Analyze and solve this problem using a decision tree What is the Maximin Alternative and c) Compute the EVPI
Suppose that speeding imposes externalities on other people resulting in a social cost of $50. A town is considering hiring an extra police officer to give out speeding tickets. If we want to maximize social welfare (absent enforcement costs), which of the following statements are true? (Assume risk neutral drivers.) a) If the probability of detection with the extra police officer is 10%, then a speeding ticket should cost $55. b) If the probability of detection with the extra police officer is 10%, then a speeding ticket should cost $500. c) If the probability of detection with the extra police officer is 100%, then no one will speed. d) If the probability of detection with the extra police officer is 90%, then a speeding ticket should cost $59 e) None of the above

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