n Content x + (- 9 C' a learn.humber.ca/ultra/courses/_186175_1/cl/outline Quantitative Methods - BSTA-320-D8A Tests and Quizzes Assignment #1 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 ($) and state of nature probabilities are given in the following payoff table. Low Demand Medium Demand High Demand \"9\". 48,400 48,400 48,400 Production Mdera.te 29,520 66,000 66,000 Production "ea\"! 45,320 30,280 107,800 Production Probability 0.2 0.3 0.5 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 36% and the associated gross profit is determined to be $106,820. 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 O 4 on- a Content x + O ( 9 C' a learn.humber.ca/ultra/courses/_186175_1/cl/outline i} G *- Quantitative Methods - BSTA-320-D8A Tests and Quizzes Assignment #1 I. No Sample Information What is the expected monetary value and associated decision for the optimal alternative? The optimal decision is Heavy v V production. ll. 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 an unfavourable market condition with 57% chance. Otherwise, it will indicate a favourable market condition. If the survey provides a favourable outlook, the revised probabilities of high and low demand are 0.47 and 0.25 respectively. If unfavourable, the probabilities calculated for medium and high demand are 0.31 and 0.25 respectively. a. What is the best expected monetary value and associated decision under a favourable survey outcome? Content X + C learn.humber.ca/ultra/courses/_186175_1/cl/outline m RA Paused Update : Quantitative Methods - BSTA-320-D8A Tests and Quizzes Assignment #1 X X a. What is the best expected monetary value and associated decision under a favourable survey outcome? Max EMV = $ The optimal decision is Heavy vy production. b. What is the best expected monetary value and associated decision under an ufavourable survey outcome? Max EMV = $ The optimal decision is Moderate y production. 28 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 $7,398. Conduct the market survey. If favourable. choose the Heav plan. If unfavourable. choose the Heavy plan. Priv Ter