Before she can implement the strategy found in part (A), the marketing VP informs Proctor that she has developed a market test for the product. She proposes to test a sample population to determine its preference for the breakfast drink. Based on histories of similar tests, she estimates that the sample population would not accept the drink with probability 0.2, when in fact the product would be accepted by the general public. She also believes that one time in forty, the drink would be accepted by the public when the test group rejects it. Finally, she informs Procter that the probability that the public accepts the drink when the test group accepts is 0.4. C. Determine the best strategy by performing a decision tree analysis. D. How much is the expected cost of the market test?
Before she can implement the strategy found in part (A), the marketing VP informs Proctor that she has developed a market test for the product. She proposes to test a sample population to determine its preference for the breakfast drink. Based on histories of similar tests, she estimates that the sample population would not accept the drink with probability 0.2, when in fact the product would be accepted by the general public. She also believes that one time in forty, the drink would be accepted by the public when the test group rejects it. Finally, she informs Procter that the probability that the public accepts the drink when the test group accepts is 0.4. C. Determine the best strategy by performing a decision tree analysis. D. How much is the expected cost of the market test?
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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