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This is my question this is an old solution provided by chegg but and i think it is wrong since they dont consider the positive
This is my question
this is an old solution provided by chegg but and i think it is wrong since they dont consider the positive result (favorable) and negative result (unfavorable) provided by the survey and the pilot study , I'd appreciate it if you could provide me with a new correct solution.
Abdullah Al-Mahrouqi is considering about producing a new type of electric beard trimmer for men. If the market were favorable, he would get a return of RO 80,000, but if the market for this new type of beard trimmer were unfavorable, he would lose RO 48,000. Since Ahmed Al-Farsi is a good friend of Abdullah Al- Mahrouqi, Abdullah is considering the possibility of using Al-Farsi Marketing Research to gather additional information about the market for the beard trimmer. Ahmed has suggested that Abdullah use either a survey or a pilot study to test the market. The survey would be a sophisticated questionnaire administered to a test market. It will cost RO 4,000. Another alternative is to run a pilot study. This would involve producing a limited number of the new beard trimmers and trying to sell them in Al-Khoudh and Al-Seeb. The pilot study is more accurate but is also more expensive. It will cost RO 16,000. Ahmed AlFarsi has suggested that it would be a good idea for Abdullah to conduct either the survey or the pilot before Abdullah makes the decision concerning whether to produce the new beard trimmer. But Abdullah is not sure if the value of the survey or the pilot is worth the cost. Abdullah estimates that the probability of a successful market without performing a survey or pilot study is 0.5. Furthermore, the probability of a favorable survey result given a favorable market for beard trimmers is 0.7, and the probability of a favorable survey result given an unsuccessful market for beard trimmers is 0.2. In addition, the probability of an unfavorable pilot study given an unfavorable market is 0.9, and the probability of an unsuccessful pilot study result given a favorable market for beard trimmers is 0.2. Make a decision tree for this problem and find the maximum EMV. Also, find the EVSI. Decision tree 0.5 (fan) 80 DOO - 16ooo 0 16000 0 48000 0.5 Haw) NO MR 16000 80000 fou (0.9) } 51200 H8000 Pilot - 16 Me unfou (0.1) Survey foy_102) 80000 } - 37000 -LOCO Non fav (0.3) 3000 Market Research MR- Reutenue Cooo-160000 Expected 0.5 * 80000 +0.5 * (- 48000) NO MR (-48000) 51200 pilot +0.9(80000) +0.1 - 16000 MR sunity -4000 + 0.7 (80000 ) +0-3 (-48000) = 34600 Abdullah Al-Mahrouqi is considering about producing a new type of electric beard trimmer for men. If the market were favorable, he would get a return of RO 80,000, but if the market for this new type of beard trimmer were unfavorable, he would lose RO 48,000. Since Ahmed Al-Farsi is a good friend of Abdullah Al- Mahrouqi, Abdullah is considering the possibility of using Al-Farsi Marketing Research to gather additional information about the market for the beard trimmer. Ahmed has suggested that Abdullah use either a survey or a pilot study to test the market. The survey would be a sophisticated questionnaire administered to a test market. It will cost RO 4,000. Another alternative is to run a pilot study. This would involve producing a limited number of the new beard trimmers and trying to sell them in Al-Khoudh and Al-Seeb. The pilot study is more accurate but is also more expensive. It will cost RO 16,000. Ahmed AlFarsi has suggested that it would be a good idea for Abdullah to conduct either the survey or the pilot before Abdullah makes the decision concerning whether to produce the new beard trimmer. But Abdullah is not sure if the value of the survey or the pilot is worth the cost. Abdullah estimates that the probability of a successful market without performing a survey or pilot study is 0.5. Furthermore, the probability of a favorable survey result given a favorable market for beard trimmers is 0.7, and the probability of a favorable survey result given an unsuccessful market for beard trimmers is 0.2. In addition, the probability of an unfavorable pilot study given an unfavorable market is 0.9, and the probability of an unsuccessful pilot study result given a favorable market for beard trimmers is 0.2. Make a decision tree for this problem and find the maximum EMV. Also, find the EVSI. Decision tree 0.5 (fan) 80 DOO - 16ooo 0 16000 0 48000 0.5 Haw) NO MR 16000 80000 fou (0.9) } 51200 H8000 Pilot - 16 Me unfou (0.1) Survey foy_102) 80000 } - 37000 -LOCO Non fav (0.3) 3000 Market Research MR- Reutenue Cooo-160000 Expected 0.5 * 80000 +0.5 * (- 48000) NO MR (-48000) 51200 pilot +0.9(80000) +0.1 - 16000 MR sunity -4000 + 0.7 (80000 ) +0-3 (-48000) = 34600
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