decide whether to bring out a full, partial or minimal product line. The company has three levels of product acceptance and has estimated their probability of occurrence. Management will make the decision on the basis of maximising the expecied profit from the first year of production. The relevant data are shown in the following table where first year profits in thousand rupees are given: A company is trying to manufacture a new type of toy. The company is attempting to Fair Poor State of Nature -> Good 0-4 0-4 Product Line Į Probability: 0-2 60 15 Full 90 80 65 10 Partial Minima! 60 50 (i) What is the optimum product line and its expected profit? (ii) What is the optimum valhre of expected opportunity loss and the optimum course of action?
decide whether to bring out a full, partial or minimal product line. The company has three levels of product acceptance and has estimated their probability of occurrence. Management will make the decision on the basis of maximising the expecied profit from the first year of production. The relevant data are shown in the following table where first year profits in thousand rupees are given: A company is trying to manufacture a new type of toy. The company is attempting to Fair Poor State of Nature -> Good 0-4 0-4 Product Line Į Probability: 0-2 60 15 Full 90 80 65 10 Partial Minima! 60 50 (i) What is the optimum product line and its expected profit? (ii) What is the optimum valhre of expected opportunity loss and the optimum course of action?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![decide whether to bring out a fiull, partial or minimal product line. The company has three levels of product
acceptance and has estimated their probability of occurrence. Management will make the decision on the
basis of maximising the expected profit from the first vear of production. The relevant data are shown in the
following table where first year profits in thousand rupees are given :
A company is trying to manufacture a new type of toy. The company is attempting to
Fair
Poor
State of Nature >
Good
(0.4
0-4
Product Line
Probability:
0:2
60
15
Full
90
80
65
10
Partial
Minima!
60
50
(i) What is the optimum product line and its expected profit?
(ii) What is the optimum vahre of expected opportunity loss and the optimum course of action?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F96872fde-ff86-4de9-8c01-2ed150c03f6d%2F34df8538-2295-4f11-a193-f55a46d5b7ce%2Fzod1jdn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:decide whether to bring out a fiull, partial or minimal product line. The company has three levels of product
acceptance and has estimated their probability of occurrence. Management will make the decision on the
basis of maximising the expected profit from the first vear of production. The relevant data are shown in the
following table where first year profits in thousand rupees are given :
A company is trying to manufacture a new type of toy. The company is attempting to
Fair
Poor
State of Nature >
Good
(0.4
0-4
Product Line
Probability:
0:2
60
15
Full
90
80
65
10
Partial
Minima!
60
50
(i) What is the optimum product line and its expected profit?
(ii) What is the optimum vahre of expected opportunity loss and the optimum course of action?
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