TUI contracted with the DMA. Based on competitive research, DMA has found that there are new competing
Question:
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TUI contracted with the DMA. Based on competitive research, DMA has found that there are new competing drugs recently granted FDA approval. TUI will need to be aware of the competition in the market as they consider whether to develop a new drug line, exploit the existing drug line for potential new applications, or simply continue with the current drug line at this time. The new formula is a clear advancement developed under strict guidelines and is scheduled for FDA approval in the first quarter of the year.Currently, there are only two other widely available products on the market that meet the same needs. In a highly favorable market that is supported by TUI's drug offering being considered the better solution, a new drug line with have 58% likelihood of success with a demand of 3022 units per month, the existing drug will have a 50% likelihood with a demand of 4466 units per month, and making no changes will be 66% likely to succeed with a demand of 546 units per month. In an unfavorable market, a new drug line will have a demand of 1244 units per month, the existing drug will have a demand of 1800 units per month, and making no changes will have a demand of 147 units per month. Profits are estimated to be 0.54 per unit for the new drug line, 0.66 per unit for the existing drug line with new FDA-approved uses, while the current profit is 0.76 per unit.(DECISIONTREESHOWNINPICTUREBELOW)
- FILL IN a decision tree diagram, including each of the following: ? state-of-nature nodes ? calculated payoffs,each expressed out to two decimal places ? expected values,each expressed out to two decimal places(show formula, NOT ALL WORK)
- Explain the role of probabilities and the role of demand foreachbranch.
- Explain how the expected value ofeachnode is determined based on payoffs.
ANSWER MUST ANSWER 3 QUESTIONS, WITH PICTURE OF DECISION TREE
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