The NBS television network earns an average of$400,000 from a hit show and loses an average of $100,000on a flop. Of all shows reviewed by the network, 25% turnout to be hits and 75% turn out to be flops. For $40,000, amarket research firm will have an audience view a pilot ofa prospective show and give its view about whether theshow will be a hit or a flop. If a show is actually going tobe a hit, there is a 90% chance that the market research firmwill predict the show to be a hit. If the show is actuallygoing to be a flop, there is an 80% chance that the marketresearch firm will predict the show to be a flop. Determinehow the network can maximize its expected profits. Alsofind EVSI and EVPI.

The NBS television network earns an average of$400,000 from a hit show and loses an average of $100,000on a flop. Of all shows reviewed by the network, 25% turnout to be hits and 75% turn out to be flops. For $40,000, amarket research firm will have an audience view a pilot ofa prospective show and give its view about whether theshow will be a hit or a flop. If a show is actually going tobe a hit, there is a 90% chance that the market research firmwill predict the show to be a hit. If the show is actuallygoing to be a flop, there is an 80% chance that the marketresearch firm will predict the show to be a flop. Determinehow the network can maximize its expected profits. Alsofind EVSI and EVPI.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section10.6: The Effects Of Input Distributions On Results

Problem 28P

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