In Example 9.2, use a two-way PrecisionTree sensitivity analysis to examine the changes in both of the two previous problems simultaneously. Let the probability of technological success vary from 0.6 to 0.9 in increments of 0.05, and let the fixed cost of development vary as indicated in the previous problem. Explain in a short memo exactly what the results of the sensitivity analysis imply about Acme’s best strategy.
Practical Management Science
Practical Management Science
Solutions
In Example 9.2, use a two-way PrecisionTree sensitivity analysis to examine the changes in both of the two previous problems simultaneously. Let the probability of technological success vary from 0.6 to 0.9 in increments of 0.05, and let the fixed cost of development vary as indicated in the previous problem. Explain in a short memo exactly what the results of the sensitivity analysis imply about Acme’s best strategy.
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