The management is faced with the problem of choosing one of the products for manufacturing. The probability matrix after market research for the two products was as follows: State of nature Acts Good Fair Рoor Product 'A' 0.75 0.15 0.10 Product 'B' 0.60 0.30 0.10 The profits that the management can make for different levels of market acceptability of the products are as follows : Profit (in USD) if market is Acts Good Fair Рoor Product 'A' 35,000 15,000 5,000 Product 'B' 1,000 20,000 Loss 3,000 Calculate expected value of the choice of alternative and advise the management.
The management is faced with the problem of choosing one of the products for manufacturing. The probability matrix after market research for the two products was as follows: State of nature Acts Good Fair Рoor Product 'A' 0.75 0.15 0.10 Product 'B' 0.60 0.30 0.10 The profits that the management can make for different levels of market acceptability of the products are as follows : Profit (in USD) if market is Acts Good Fair Рoor Product 'A' 35,000 15,000 5,000 Product 'B' 1,000 20,000 Loss 3,000 Calculate expected value of the choice of alternative and advise the management.
Chapter8: Sequences, Series,and Probability
Section8.7: Probability
Problem 11ECP: A manufacturer has determined that a machine averages one faulty unit for every 500 it produces....
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Transcribed Image Text:The management is faced with the problem of choosing one of the products
for manufacturing. The probability matrix after market research for the two products was as
follows:
State of nature
Acts
Good
Fair
Рoor
Product 'A'
0.75
0.15
0.10
Product 'B'
0.60
0.30
0.10
The profits that the management can make for different levels of market acceptability of the
products are as follows :
Profit (in USD) if market is
Acts
Good
Fair
Рoor
Product 'A'
35,000
15,000
5,000
Product 'B'
-1,000
20,000
Loss 3,000
Calculate expected value of the choice of alternative and advise the management.
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