1. Individual Problems 17-1 Malaysia You're the manager of global opportunities for a U.S. manufacturer that is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, the Philippines, and Singapore as described in the following table: Success Level Big Mediocre Failure Malaysia Probability 0.7 0.1 0.2 Units 1,300,000 416,000 0 Philippines Probability 0.2 0.3 0.5 Units 600,000 360,000 0 Singapore Probability 0.4 0.3 0.3 Units 1,500,000 750,000 0 The product sells for $20, and each unit has a constant marginal cost of $16. Assume that the (fixed) cost of entering the market (regardless of which market you select) is $500,000. In the following table, enter the expected number of units sold, and the expected profit, from entering each market. Market Expected Number of Units Sold Expected Profit Malaysia Philippines Singapore If you were to enter one of the previously described markets, which one would you enter in order to earn the highest expected profit? Philippines Singapore Malaysia
1. Individual Problems 17-1 Malaysia You're the manager of global opportunities for a U.S. manufacturer that is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, the Philippines, and Singapore as described in the following table: Success Level Big Mediocre Failure Malaysia Probability 0.7 0.1 0.2 Units 1,300,000 416,000 0 Philippines Probability 0.2 0.3 0.5 Units 600,000 360,000 0 Singapore Probability 0.4 0.3 0.3 Units 1,500,000 750,000 0 The product sells for $20, and each unit has a constant marginal cost of $16. Assume that the (fixed) cost of entering the market (regardless of which market you select) is $500,000. In the following table, enter the expected number of units sold, and the expected profit, from entering each market. Market Expected Number of Units Sold Expected Profit Malaysia Philippines Singapore If you were to enter one of the previously described markets, which one would you enter in order to earn the highest expected profit? Philippines Singapore Malaysia
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 4MC
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1. Individual Problems 17-1
Malaysia
You're the manager of global opportunities for a U.S. manufacturer that is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, the Philippines, and Singapore as described in the following table:
|
|
Success Level
|
||
|---|---|---|---|
|
Big
|
Mediocre
|
Failure
|
|
| Malaysia | |||
| Probability | 0.7 | 0.1 | 0.2 |
| Units | 1,300,000 | 416,000 | 0 |
| Philippines | |||
| Probability | 0.2 | 0.3 | 0.5 |
| Units | 600,000 | 360,000 | 0 |
| Singapore | |||
| Probability | 0.4 | 0.3 | 0.3 |
| Units | 1,500,000 | 750,000 | 0 |
The product sells for $20, and each unit has a constant marginal cost of $16. Assume that the (fixed) cost of entering the market (regardless of which market you select) is $500,000.
In the following table, enter the expected number of units sold, and the expected profit, from entering each market.
|
Market
|
Expected Number of Units Sold
|
Expected Profit
|
|---|---|---|
| Malaysia |
|
|
| Philippines |
|
|
| Singapore |
|
|
If you were to enter one of the previously described markets, which one would you enter in order to earn the highest expected profit?
Philippines
Singapore
Malaysia
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