Lee Gemal OXMindtap Cengage LX ng.cengage.com/static/nb/u/evo/index.html?deploymentid-58371421345266024473303101928e58N-97813376154888d-158. A CENGAGE | MINDTAP HW 3: Chapter 15 Assignment 3 R eBook 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 on the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): 96 O Low Demand T Decision Alternative Manufacture, d Purchase, da The state-of-nature probabilities are P(s)-0.25, P(s) - 0.35, and P(a)-0.40 (a) Use a decision tree to recommend a decision Manufacture component part (b) Use EVPL to determine whether Gorman should attempt to obtain a better estimate of demand. Enter your answer in thousands dollars. For example, an answer of $200 thousands should be entered a 200,000. Gorman should attempt to obtain a better estimate of demand, as the additional information could be worth up to 51 6 -20 10 for Gorman Y & State of Nature Medium Demand N C 52 40 45 00 High Demand 8 144 ( 1 6 53 100 70 > O Q Search this cours ww Check My Work O P 104408524 SAM W Bailed On Camp X CENGAGE | MINDTAP HW 3: Chapter 15 Assignment $ /ng.cengage.com/static/nb/u/eve/index.html?deploymeetid-5837142134526602447330310192558N-97813376154588d-155 A To A R F P(FIS) - 0.10 P(FI) -0.40 (c) A test market study of the potential demand for the product is expected to reperer a favorable (F) or (u) condition. The relevant conditional probabilities are as follows: 96 5 P(U[s) - 0.90 P(U)-0.60 P(UI)-0.40 P(FI)-0.60 What is the probability that the market research report will be favorable? (Hint: We can find this value by summing the joint probability values as follows: P(F)- P(FS) + P(F) ()-P(s)P(F) P(x)P(F) PPF)] required, round your answer to three decimal places. (d) What is Gorman's optimal decision strategy? Choose the correct option. A. Conduct test market, and manufacture component part, regardless of the market research report B. Conduct test market, and purchase component part, regardless of the market research report C. Conduct test market, and manufacture component part if market is favorable, or purchase component part of market is unfavorable D. Do not conduct test market, and purchase component part E. Do not conduct test market, and manufacture component part T Et (e) What is the expected value of the market research information? Enter your answer in thousands dollars, For example, an answer of $200 thousands should be entered as 200,000. If your answer is zero, enter"0" 6 Y God (Mindle Cengage LX G H & 7 hp U - 00 8 - 144 5326 ( 9 O O KL Q Search this cours P ( 1 ReadSpeaks VIEANS 4 $21A was aver earch 10 eBook 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 on the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): Low Demand 51 State of Nature Medium Demand. -20 10 Decision Alternative. Manufacture, di Purchase, da The state-of-nature probabilities are P(s) 0.25, P($2) 0.35, and P(s) - 0.40 (a) Use a decision tree to recommend a decision. Manufacture component part v (b) Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. Enter your answer in thousands dollars. For example, an answer of $200 thousands should be entered as 200,000. Gorman should attempt to obtain a better estimate of demand, as the additional information could be worth up to s 52 40 High Demand 45 53 Question 5 of 5 100 70 Check My Work for Gorman. (c) A test market study of the potential demand for the product is expected to report either a favorable ( or unfavorable E condition. The 19004 A A-Z wer HW 3: Chapter 15 Assignment for Gorman. (c) A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (1) condition. The relevant conditional probabilities are as follows: P(FIS) 0.10 P(FIS) - 0.40 P(FIS) 0.60 P(UI)-0.40 What is the probability that the market research report will be favorable? [Hint: We can find this value by summing the joint probability values as follows: P(F)- P(FOS) + P(FO) + P(Fs) - P(1)P(Fiss) + P(sz)P(Fisz)+ P(s)P(Fisa).] If required, round your answer to three decimal places. (d) What is Gorman's optimal decision strategy? Choose the correct option. A. Conduct test market, and manufacture component part, regardless of the market research report B. Conduct test market, and purchase component part, regardless of the market research report C. Conduct test market, and manufacture component part if market is favorable, or purchase component part if market is unfavorable D. Do not conduct test market, and purchase component part E. Do not conduct test market, and manufacture component part $ Jump course P(Uls) - 0.90 P(US) 0.60 C (e) What is the expected value of the market research information? Enter your answer in thousands dollars. For example, an answer of 1200 thousands should be entered as 200,000. If your answer is zero, enter "0" O ii C 39004 0x Study 11 AM 134200 Q A-Z