eBook Problem 4-25 The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): State of Nature Low Demand Medium Demand High Demand Decision Alternative Si 52 S3 Manufacture, di -20 40 100 Purchase, d2 10 45 70 The state-of-nature probabilities are P(5:) - 0.35, P(52) = 0.35, and P(s) - 0.30. a. Use a decision tree to recommend a decision. Recommended decision: Manufacture component b. Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. EVPI: $ C. A test market study of the potential demand for the product is expected to report ether a favorable (F) or unfavorable (u) condition. The relevant conditional probabilities are as follows: PCF51) - 0.10 PCF $2) 0.40 P(FS3)0.60 PCU I 5) 0.90 PCU 52) = 0.60 PCU 53) - 0.40 Next > Email instructor Save and Exe Submit Assignment for Grading All work saved do invokerStake AssignmentSessionLocator &inprogress-false Homewo Calculator EVPI: $ c. A test market study of the potential demand for the product is expected to report either a favorable ( or unfavorable (L) condition. The relevant conditional probabilities are as follows: PCF 8) - 0.10 PCF52) - 0.40 PEF 53) - 0.60 PEU) - 0.90 PU I52) - 0.60 PLUS) - 0.40 What is the probability that the market research report will be favorable? If required, round your answer to three decimal places PA- Email instructor Save and El All work saved Submk Assignment for Grading eBook Problem 4-25 The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): State of Nature Low Demand Medium Demand High Demand Decision Alternative Si 52 S3 Manufacture, di -20 40 100 Purchase, d2 10 45 70 The state-of-nature probabilities are P(5:) - 0.35, P(52) = 0.35, and P(s) - 0.30. a. Use a decision tree to recommend a decision. Recommended decision: Manufacture component b. Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. EVPI: $ C. A test market study of the potential demand for the product is expected to report ether a favorable (F) or unfavorable (u) condition. The relevant conditional probabilities are as follows: PCF51) - 0.10 PCF $2) 0.40 P(FS3)0.60 PCU I 5) 0.90 PCU 52) = 0.60 PCU 53) - 0.40 Next > Email instructor Save and Exe Submit Assignment for Grading All work saved do invokerStake AssignmentSessionLocator &inprogress-false Homewo Calculator EVPI: $ c. A test market study of the potential demand for the product is expected to report either a favorable ( or unfavorable (L) condition. The relevant conditional probabilities are as follows: PCF 8) - 0.10 PCF52) - 0.40 PEF 53) - 0.60 PEU) - 0.90 PU I52) - 0.60 PLUS) - 0.40 What is the probability that the market research report will be favorable? If required, round your answer to three decimal places PA- Email instructor Save and El All work saved Submk Assignment for Grading
