3. The marketing manager for a company that manufactures industrial sewing machines is considering introducing a new type of sewing machine. It has been determined that if the new sewing machine is introduced and sales are 'good', $30,000 will be returned monthly to the company. If sales are 'poor', a loss of $3,000 monthly will be incurred. These values have been determined after subtracting production and advertising costs. If the manager decides not to introduce the new sewing machine a monthly return of $4,000 is expected from investing funds elsewhere. It is assumed that the prior probabilities of 'good' and 'poor' sales resulting after introducing the new design are 0.6 and 0.4 respectively. Before deciding whether to introduce the new sewing machine, the manager must decide whether to hire, at a cost of $3,000, a market survey agency to obtain buyer reaction to the new product. There is a 0.50 probability that the agency's findings would be favourable (and 0.50 probability that the findings would be unfavourable). The probability of 'good' sales given the agency's findings favourable is 0.84 whereas the probability of 'poor' sales given the report is unfavourable is 0.64. Fully label all parts of the decision tree and show the required probabilities and dollar outcomes. Calculate the EVSI and show the decisions. are 3. The marketing manager for a company that manufactures industrial sewing machines is considering introducing a new type of sewing machine. It has been determined that if the new sewing machine is introduced and sales are 'good', $30,000 will be returned monthly to the company. If sales are 'poor', a loss of $3,000 monthly will be incurred. These values have been determined after subtracting production and advertising costs. If the manager decides not to introduce the new sewing machine a monthly return of $4,000 is expected from investing funds elsewhere. It is assumed that the prior probabilities of 'good' and 'poor' sales resulting after introducing the new design are 0.6 and 0.4 respectively. Before deciding whether to introduce the new sewing machine, the manager must decide whether to hire, at a cost of $3,000, a market survey agency to obtain buyer reaction to the new product. There is a 0.50 probability that the agency's findings would be favourable (and 0.50 probability that the findings would be unfavourable). The probability of 'good' sales given the agency's findings favourable is 0.84 whereas the probability of 'poor' sales given the report is unfavourable is 0.64. Fully label all parts of the decision tree and show the required probabilities and dollar outcomes. Calculate the EVSI and show the decisions. are
