Sampson Corp. Is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Market Reaction Low response Moderate response Bigh response Very high response Sales in Units 60 80 100 120 Expected value a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Probabilities 0.20 0.30 0.30 0.20 units

Sampson Corp. Is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Market Reaction Low response Moderate response Bigh response Very high response Sales in Units 60 80 100 120 Expected value a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Probabilities 0.20 0.30 0.30 0.20 units

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 13P: The following profit payoff table was presented in Problem 1: The probabilities for the states of...

See similar textbooks

Similar questions

Betas and risk rankings Personal Finance Problem You are considering three stocks -A, B, and C- for possible inclusion in your investment portfolio. Stock A has a beta of 1.2, stock B has a beta of 1.5, and stock C has a beta of - 0.2. a. Rank these stocks from the most risky to the least risky. b. If you believed that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? c. If you anticipated a major stock market rally, which stock would you add to your portfolio? a. Which stock is the most risky one? (Select the best answer below.) O A. Stock A O B. Stock B O C. Stock C Which stock is the least risky one? (Select the best answer below.) O A. Stock B O B. Stock A O C. Stock C b. If you felt that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio? (Select the best answer below.) b. If you felt that the stock market was getting ready to experience a…
You are given the following data about Asset A and Asset B. Asset A Asset B Expected returns 8.6% 7.9% Standard Deviation 3.8% 4.6% Assuming that an investor is to choose between Asset A or Asset B, explain which asset a rational investor will choose. c) With the use of a diagram, explain why an investor will always choose a point on the SML line.
Choose the letter/s of the correct answer/s. In Plant Design, one is required to compute for one time-independent and one time-dependent market indicator.Which of the following pairs will provide a better market analysis?A. Payback Period & Breakeven PointB. Capitalized Cost & Payback PeriodC. Discounted Payback Period & Annual WorthD. Inflation Rate & ROI
CVP analysis indicates that your start-up will break even with the current sales mix and price levels. You have a target income in mind. What analysis might you perform to assess the likelihood of achieving this income?
Metal Manufacturing has isolated four alternatives for meeting its need for increased production capacity. The following table summarizes data gathered relative to each of these alternatives, Alternative Expected return Standard deviation A 21% 7.9% B 24% 9.7% C 17% 6.2% D 13% 3.2% a. Calculate the coefficient of variation for each alternative. b. If the firm wishes to minimize risk, which alternative do you recommend? Why?
Which of the following statements about the RFM analysis above is NOT correct? A) The average response rate is 2.02%. B) Recency metric may perform better to predict responsive customers than Frequency and Mon- etary value metrics. C) The response rate of recency-based quintile 1 (4.50%) is much greater than the average re- sponse rate, implying that company X would be able to reduce the costs incurred for having a successful number of responses in the campaign if it chose the customers only from the quintile (recency-based quintile 1). D) This result shows a failure of predicting profitable customers through the RFM metrics because the response rate does not dramatically vary from monetary value-based quintile 1 to 5.
We can get a sense of how model output responds to changes in inputs from sensitivity analyses. Some argue that we might draw very different conclusions when using different boundaries, especially when model output is a non-linear function of inputs. For example, we compute the net present value (NPV) of a business with a 10% discount rate. We can choose +/- 1% for our sensitivity analysis, or +/-5% for our analysis. For this reason, some argue that one can manipulate sensitivity analysis to support one’s prior. What do you think of this comment?
If Promus could make order amounts after realizing demand, what would the expected value of this information be? Use the simulation results to calculate the mean profit of this case to compare with the mean profit of the non-perfect information case. You will need to enter a formula for Sales.
Kabriel Company must choose between two assets purchases. The annual rate of return and related probabilities given below summarize the firm’s analysis. i. Calculate the expected return ii. Compute the standard deviation of the expected return iii. Which asset should this company select? Justify your answer.
Quest. Simulation) The mai..gement of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. Probability distributions for the purchase cost, the labor cost, and the transportation cost are as follows: Labour Purchase Transportation Cost ($) Cost Cost ($) Probability ($) Probability Probability 10 0.25 20 0.1 3 0.75 11 0.45 22 0.25 0.25 12 0.3 24 0.35 25 0.3 Assume that these are the only costs and that the selling price for the product will be $45 per unit. a. Provide the base (most likely)-case, worst-case, and best-case calculations for the profit per unit. b. Set up intervals of random numbers that can be used to randomly generate the three cost components, and find the average profit based on 10 simulation trials. Show your simulation model (including the formulas sed) as developed with Excel. c. Using the random numbers 0.3726, 0.5839, and 0.8275, calculate the profit per unit. ( d. Management believes the project may not be…
Which of these two companies is best for investment? Trend Probability Rate of Retrun (Company A) Rate of Retrun (Company B) Bullish Trend 0.3 50% 25% Normal Trend 0.4 20% 15% Beaerish Trend 0.3 -10% 15%
Alternate & Co is attempting to choose the best of two alternatives asset investment A and B, each requiring an initial investment of RM10000 and both having most likely, optimistic and pessimistic rate of return as shown in the table below. Calculate the following from the data given below. i. Expected rate of return for Asset A & B ii. Variance for Asset A & B iii. Standard deviation for Asset A & B iv. Coefficient of variation for Asset A & B v. Which of the asset is more risky? Asset A Asset B Initial Investment Rm10000 Annual rate of return RM10000 Annual rate of return Probability of this event occurring (2) 0.25 Possible outcomes (3) (5) (1) Pessimistic Most likely Optimistic 13% 7% 0.50 15% 15% 0.25 17% 23% 1.0