II. Sample Information As noted earlier, Humber is considering hiring Professor Leung to conduct a market research survey. It is now determined that the results of the survey will indicate a favourable market condition with 56% chance. Otherwise, it will indicate an unfavourable market condition. If the survey provides a favourable outlook, the revised probabilities of low and medium demand are 0.22 and 0.37 respectively. If unfavourable, the probabilities calculated for high and medium demand are 0.25 and 0.34 respectively. Using the given sample information, create a multistage decision tree based on the tree you selected in Part A (lla). Solve the tree. a. What is the best expected monetary value and associated decision under a favourable survey outcome? Max EMV = $ The optimal decision is Select an answer production. b. What is the best expected monetary value and associated decision under an ufavourable survey outcome? Max EMV = $ The optimal decision is Select an answer production c. What is the value with the sample information? EV with SI = $ d. What is the value of the sample information (EVSI)? EVSI = $ e. What is the optimal decision strategy if Professor Leung's consulting fees were $5,220. Conduct the market survey. If favourable, choose the Heavy plan. If unfavourable, choose the Light plan. The questions in this section are independent of Part A and Part B. The scenario is the same but the values are different. Senior management at Humber bakery requested a new analysis based on adjusting the selling price and the number of units produced under each production plan. Initial probability estimates are also updated. Resulting gross profits (S) and state of nature probabilities are given in the following payoff table. Low Demand Medium Demand High Demand 29,540 38,000 38,000 Light Production Moderate Production Heavy Production 6,240 52,770 57,000 -40,360 6,170 78,080 Probability 0.3 0.5 0.2 The new analysis also necessitated updating the offer made to Bramptinos under the heavy production plan. If Humber chooses the heavy production plan, the probability that Bramptinos will accept the new offer is 37% and the associated gross profit is determined to be $90,000. Again here, if Bramptinos declines the offer, the loaves will still sell based on current demand conditions (low, medium, or high). Use the decision tree you selected from Part A along with the payoffs and probabilities provided on this page to construct a decision tree for the problem. 1. No Sample Information What is the expected monetary value and associated decision for the optimal alternative? II. Sample Information As noted earlier, Humber is considering hiring Professor Leung to conduct a market research survey. It is now determined that the results of the survey will indicate a favourable market condition with 56% chance. Otherwise, it will indicate an unfavourable market condition. If the survey provides a favourable outlook, the revised probabilities of low and medium demand are 0.22 and 0.37 respectively. If unfavourable, the probabilities calculated for high and medium demand are 0.25 and 0.34 respectively. Using the given sample information, create a multistage decision tree based on the tree you selected in Part A (lla). Solve the tree. a. What is the best expected monetary value and associated decision under a favourable survey outcome? Max EMV = $ The optimal decision is Select an answer production. b. What is the best expected monetary value and associated decision under an ufavourable survey outcome? Max EMV = $ The optimal decision is Select an answer production c. What is the value with the sample information? EV with SI = $ d. What is the value of the sample information (EVSI)? EVSI = $ e. What is the optimal decision strategy if Professor Leung's consulting fees were $5,220. Conduct the market survey. If favourable, choose the Heavy plan. If unfavourable, choose the Light plan. The questions in this section are independent of Part A and Part B. The scenario is the same but the values are different. Senior management at Humber bakery requested a new analysis based on adjusting the selling price and the number of units produced under each production plan. Initial probability estimates are also updated. Resulting gross profits (S) and state of nature probabilities are given in the following payoff table. Low Demand Medium Demand High Demand 29,540 38,000 38,000 Light Production Moderate Production Heavy Production 6,240 52,770 57,000 -40,360 6,170 78,080 Probability 0.3 0.5 0.2 The new analysis also necessitated updating the offer made to Bramptinos under the heavy production plan. If Humber chooses the heavy production plan, the probability that Bramptinos will accept the new offer is 37% and the associated gross profit is determined to be $90,000. Again here, if Bramptinos declines the offer, the loaves will still sell based on current demand conditions (low, medium, or high). Use the decision tree you selected from Part A along with the payoffs and probabilities provided on this page to construct a decision tree for the problem. 1. No Sample Information What is the expected monetary value and associated decision for the optimal alternative
