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Video Tech is considering marketing one of two new video games for the coming holiday season: Battle Pacific or Space Pirates. Battle Pacific is a
Video Tech is considering marketing one of two new video games for the coming holiday season: Battle Pacific or Space Pirates. Battle Pacific is a unique game and appears to have no competition. Estimated profits (in thousands of dollars) under high, medium, and low demand are as follows: Demand Bottle Pacific High Medium Low Profit $1000 $700 Probability 0.2 01.5 0.3 Video Tech is optimistic about its Space Pirates game. However, the concern is that prof- itability will be affected by a competitor's introduction of a video game viewed as similar to Space Pirates. Estimated profits (in thousands of dollars) with and without competition are as follows: Demand Space Pirates with Competition High Medium Low Profit $400 $200 Probability 0.3 0.4 0.3 Space Pirates Demand without Competition High Medium Low Profit $1600 $800 $400 Probability 0.5 0.3 0.2 Develop a decision tree for the Video Tech problem. h. For planning purposes. Video Tech believes there is a 0).6 probability that its competi- tor will produce a new game similar to Space Pirates. Given this probability of com- petition, the director of planning recommends marketing the Battle Pacific video game. Using expected value, what is your recommended decision
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