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You are given the following payoff table (in K million), about a cooking oil producer in Lusaka. The company is researching for its 2019 budget production levels.         High Demand Average Demand Low Demand Produce 30,000 39 5 -13 Produce 20,000 28 12 9 Produce 12,000 13 4 -10 Probability ? 0.5 0.2         Required: a) Explain the meaning of 39 and -10 in the payoff table. b) What are the expected payoffs for each production level? (Note that you will have to determine the missing probability). c) What is the expected payoff under perfect information? d) How much should the company invest in further market research to obtain perfect information

You are given the following payoff table (in K million), about a cooking oil producer in Lusaka. The company is researching for its 2019 budget production levels.         High Demand Average Demand Low Demand Produce 30,000 39 5 -13 Produce 20,000 28 12 9 Produce 12,000 13 4 -10 Probability ? 0.5 0.2         Required: a) Explain the meaning of 39 and -10 in the payoff table. b) What are the expected payoffs for each production level? (Note that you will have to determine the missing probability). c) What is the expected payoff under perfect information? d) How much should the company invest in further market research to obtain perfect information

Marketing
Marketing
20th Edition
ISBN:9780357033791
Author:Pride, William M
Publisher:Pride, William M
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
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You are given the following payoff table (in K million), about a cooking oil producer in Lusaka. The company is researching for its 2019 budget production levels.

 

 

 

 

High Demand

Average Demand

Low Demand

Produce 30,000

39

5

-13

Produce 20,000

28

12

9

Produce 12,000

13

4

-10

Probability

?

0.5

0.2

 

 

 

 

Required:

a) Explain the meaning of 39 and -10 in the payoff table.
b) What are the expected payoffs for each production level? (Note that you will have to determine the missing probability).
c) What is the expected payoff under perfect information?
d) How much should the company invest in further market research to obtain perfect information
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