Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Managerial Science. Pls help me out thanks The XY Manufacturing Company must decide whether to manufacture a component part at its plant or purchase the

Managerial Science. Pls help me out thanks

image text in transcribed
The XY Manufacturing Company must decide whether to manufacture a component part at its 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 ten thousand of pesos): State of Nature Low Demand Medium Demand High Demand Decision Alternative Manufacture. d, -100 200 500 Purchase, dz 50 225 350 The state-of-nature probabilities are P(s,) = 0.35, P(s2) = 0.35, and P(s;) = 0.30. a. Use a decision tree to recommend a decision. b. Use EVPI to determine whether XY Manufacturing Company should attempt to obtain a better estimate of demand. C. A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows: P(F | s,) = 0.10 P(U | 5,) = 0.90 P(F | $2) = 0.40 P(U | $2) = 0.60 P(F | $3) = 0.60 P(U | SJ) = 0.40 What is the probability that the market research report will be favorable? d. What is XY Manufacturing Company optimal decision strategy? e. What is the expected value of the market research information? f. What is the efficiency of the information

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 2

Authors: Thomas H. Beechy

5th Edition

0071091319, 978-0071091312

More Books

Students also viewed these Accounting questions