Question
A toy manufacturing company plans to develop a new toy for the holiday season and will choose one of the two versions under consideration: Special
A toy manufacturing company plans to develop a new toy for the holiday season and will choose one of the two versions under consideration: Special and Regular editions.
Historically, 60% of their new toys have had high consumer demand and 40% have had low consumer demand.
The following table summarizes the profit that each alternative generates under each demand scenario (in $Million):
High Demand | Low Demand | |
Special Edition | 60 | 10 |
Regular Edition | 30 | 30 |
The managers of the company consider conducting a market research study to obtain sample information about consumer demand. Similar studies have found that:
- 80% of the company's products that had high consumer demand had previously received positive market survey responses.
- 10% of the company's products that had low consumer demand had previously received positive market survey responses.
Given this information, calculate the Expected Value of Sample Information (EVSI) and submit your answer.
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978-0133428469, 013342846X, 133428370, 978-0133428377
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