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New Product Development Problem A company has developed a new product. It needs to decide whether or not to product test and market test before
New Product Development Problem
A company has developed a new product. It needs to decide whether or not to product test
and market test before launch, and has been advised that, even though these processes do
cost money, they increase the likelihood of success for the product. it has been agreed
within the company that you can only market test a product once it has passed product
testing. If a product fails either test, it is regarded as worthless. You have been able to
obtain details of the costs of these testing processes, together with historical data which
suggest how much the likely success of the product is enhanced by successful testing.
Launching the product will cost and the estimates of profit are as follows:
Highly successful
Moderately successful
Low level success
Failure
The historical data that has been collected gives the following results:
Product testing costs and market testing costs Should the product fail
either of these tests it is abandoned. The probability of passing product testing is and
the probability of passing market testing is The alternative to this whole process is to
sell the product design for
A Construct a decision tree, calculate expected value at each node, and write a very brief
report advising the company on its best course of action.
B What would be the 'best' decision if the profit from the highly successful product were
estimated to be rather than
C Discuss your solution to part B by listing all the possible outcomes along with their values
and probabilities that could happen if the company is to follow the recommendation
suggested by your solution.
D Refer to the settings specified under part once again and imagine that you were the
decision maker of this company. What would you really decide to do Would you follow the
recommendation obtained by the decision tree model? Why yes or why not?
At A University, four instructors teach Foundations of Business Analytics a large compulsory
module for more than first year undergraduate students. The university timetabling team have
split the students into seven groups and have scheduled module webinars into the following time
slots:
Slot : Monday am am
Slot : Monday noon
Slot : Monday noon
Slot : Monday
Slot : Monday
Slot : Tuesday
Slot : Friday
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