AEM 417 HW 5

# AEM 417 HW 5 - c Case 1 60 probability Case 2 50...

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= .222 8)/(.778) =.987 .2)/(.222) = .865 0 = \$2015 e nts the amount one would pay for types of sample information. (i1)=P(S1)P(i1| S1) + P(S2)P(i1| S12) =0.595 (i2)=1-0.595 =0.405 (S1| i1) =0.824 (S1| i2) =0.519 ain =705784-705000 =-94216 (i1)=P(S1)P(i1| S1) + P(S2)P(i1| S12) =0.675 (i2)=1-0.675 =0.325 (S1| i1) =0.933 (S1| i2) =0.215 ain =705784-705000 =-169921 nom(5,20,.4)*.4+pbinom(5,20,.3)*.3+pbinom(5,20,.2)*.1->ij enom denom denom denom AEM 417 HW 5 Jackson Wang 1) P(S1)=.96 P(S2)=.04 P(i1 |S1)=.8 P(i1 |S2)=0.25 P(i2 |S1)=.2 P(i2 |S1)=.75

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2.)
Calculations for J&J: Calculations for Dudley:

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a) Don’t hire any of the teams, the expected gains for J&J and Dudley are negative. b) We should implement the project; it has a EV of \$705000

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Unformatted text preview: c) Case 1: 60% probability Case 2: 50% probability In both cases we should implement, however with a lower p, the expected value decreases \$165,000. d) increase by \$3? The EV goes down to \$240,000. However the new research team shouldn’t be hired but go ahead to produce the phones. 3) a) hw#4 EVwoSI= 1.014 EvwSI = 1.208 EVSI = 1.208-1.104 = 0.194 Million b ) I would hire Mr. Leaze, since the net gain would be \$184,000 after deducting the fees. 4) a) Yes, they should go ahead with publishing, since the expected profit is \$70,000 b) Using Splus: c) Do not publish...
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AEM 417 HW 5 - c Case 1 60 probability Case 2 50...

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