The White Fish company is launching its new food for sale in supermarkets throughoutIllinois. The sales department is convinced that its spicy fish dip will be a great success. Themarketing department is considering an intensive advertising campaign. The advertisingcampaign will cost $1,900,000 and if successful (70% chance) produce $9,600,000 in addedrevenue. If the campaign is less successful (30% chance), the added revenue is estimated atonly $4.200,000.If no advertising is used, the revenue is estimated at $6,500,000 if customers are receptive(with probability 0.75) and $3.200,000 with probability 0.25 if they are not receptive.a. Draw the associated decision tree.b. Roll Back Tree: Should White Fish invest in an intensive advertising campaign?c. Perform sensitivity analysis on probability of successful advertising campaign, which isnow 0.7. Detemine the range of the probability of success for which the current decisionis still the best choice.d. Perform sensitivity analysis on the cost of ad campaign, which now is 1,900,000.Determine the range of the cost of advertising for which the current decision is still thebest choice.e. Determine EVPI for the uncertainty of the success of the advertising campaignf. Assume the decision involves constant risk aversion. If the R value is 5.000.000 what is thethe utility value of each decision? Which decision is the best?

As per Bartleby guidelines, we can only solve the first three subparts of one question at a…

Answered: a. Draw the associated decision tree.…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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5. A recent marketing study has shown that for your firm’s product a 2 percent increase in advertising expenditures results in about a 1 percent increase in units sold. Similarly, a 5 percent decrease in price generates about a 10 percent increase in units sold. Last year, your firm had overall sales revenue of $25 million. Assuming the information from the marketing study is correct, how much should your firm have spend on advertising last year? (Give the answer in millions of dollars and show 2 decimal places.)
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