Happy Company is going to introduce one of the three new products (alternative) to the market:A, B and C or Do Nothing. Each of the market conditions (favourable, stable or unfavourable)affects the payoff of the products. The company estimates the following payoffs, probabilitiesand EMVS:Decision Table with Conditional Values for Happy Company:ProductMarket Condition and Payoff (RM)FavourableStableUnfavourableA8,0005,0007,0006,0003,0006,000-5,000-1,200-1,000Do NothingProbability0.40.30.3Opportunity loss table for Happy Company.:MARKET CONDITION AND PAYOFF (RM)MAXIMUM INPRODUCTFAVOURABLESTABLEUNFAVOURABLEA ROW (RM)A5,0005,000B3,0003,0001,2001,0003,0001,0008,000C1,000Do NothingProbability8,0006,0000.40.30.3Based on the above data answer the following questions:(a) Construct the expected opportunity loss table for Happy Sdn. Bhd.(b) State the best decision (value and product) under EOL method.

Happy Company is going to introduce one of the three new products (alternative) to the market: A, B and C or Do Nothing. Each of the market conditions (favourable, stable or unfavourable) affects the payoff of the products. The company estimates the following payoffs, probabilities and EMVS: Decision Table with Conditional Values for Happy Company: Product Market Condition and Payoff (RM) Favourable Stable Unfavourable -5,000 -1,200 -1,000 A 8,000 5,000 6,000 3,000 6,000 B 7,000 Do Nothing Probability 0.4 0.3 0.3 Opportunity loss table for Happy Company.: MARKET CONDITION AND PAYOFF (RM) MAXIMUM IN PRODUCT FAVOURABLE STABLE UNFAVOURABLE A ROW (RM) 5,000 1,200 A 5,000 3,000 3,000 3,000 C 1,000 1,000 1,000 Do Nothing Probability 8,000 6,000 0.3 8,000 0.4 0.3 Based on the above data answer the following questions: (a) Construct the expected opportunity loss table for Happy Sdn. Bhd. (b) State the best decision (value and product) under EOL method.

Happy Company is going to introduce one of the three new products (alternative) to the market: A, B and C or Do Nothing. Each of the market conditions (favourable, stable or unfavourable) affects the payoff of the products. The company estimates the following payoffs, probabilities and EMVS: Decision Table with Conditional Values for Happy Company: Product Market Condition and Payoff (RM) Favourable Stable Unfavourable -5,000 -1,200 -1,000 A 8,000 5,000 6,000 3,000 6,000 B 7,000 Do Nothing Probability 0.4 0.3 0.3 Opportunity loss table for Happy Company.: MARKET CONDITION AND PAYOFF (RM) MAXIMUM IN PRODUCT FAVOURABLE STABLE UNFAVOURABLE A ROW (RM) 5,000 1,200 A 5,000 3,000 3,000 3,000 C 1,000 1,000 1,000 Do Nothing Probability 8,000 6,000 0.3 8,000 0.4 0.3 Based on the above data answer the following questions: (a) Construct the expected opportunity loss table for Happy Sdn. Bhd. (b) State the best decision (value and product) under EOL method.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 31P

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