P772-4-Indradjaja - 21 January 2008 IE 417 Prof Parisay...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
21 January 2008 IE 417 Prof. Parisay Hwk #4 Parisay’s comments are in red. Pg. 772 #4 ( completed with previous solutions and utility function ) The NBS television network earns an average of $400,000 from a hit show and loses an average of $100,000 on a flop. Of all shows reviewed by the network, 25% turn out to be hits and 75% turn out to be flops. For $40,000, a market research firm will have an audience view a pilot of a prospective show and five its view about whether the show will be a hit or a flop. If a show is actually going to be a hit, there is a 90% chance that the market research firm will predict the show to be a hit. If the show is actually going to be a flop, there is an 80% chance that the market firm will predict the show to be a flop. Determine how the network can maximize its expected profits. Solve using WinQSB. Calculate EVPI and EVSI. Write a report to a manager and explain all your findings. Use utility function for a risk-neutral person and solve using WinQSB. P(S i ) P(Q j | S i ) P(S i | O j ) P(O j ) P(S i | O j ) Probability Probability "given that" Joint Probability P(outcome) P(Posterior) P(H) = .25 P(AH | H)= .9 P( AH and H)= P(H)P(AH|H)= .225 P(AH)= P(AH and H)+P(AH and F)= .375 P(H | AH)= P(H and AH)/P(AH)= . 6 P(F) = .75 P(AF | H)= .1 P( AF and H)= P(H)P(AF|H)= .025 P(AF)= P(AF and H)+P(AF and F)= .625 P(F | AH)= P(F and AH)/p(AH)=.4 P(AH | F)= .2 P( AH and F)= P(F)P(AH|F)= .15 P(H | AF)= P(H and AF)/P(AF)=.0 4 P(AF | F)= .8 P( AF and F)= P(F)P(AF| F)= .6 P(F | AF)= P(F and AF)/P(AF)=.9 6 1
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern