practice_8_solution

practice_8_solution - 0.25 Expand 400000 400000 400000 0.35...

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Unformatted text preview: 0.25 Expand 400000 400000 400000 0.35 New Plant Stable -100000 0 -15000 -100000 -100000 0.4 Contract -200000 -200000 -200000 0.25 Expand 250000 250000 250000 0.35 Expand Existing plant Expand Existing plant 15000 0 15000 Stable -50000 -50000 -50000 0.4 Contract -75000 -75000 -75000 0.25 Expand 50000 50000 50000 0.35 Do Nothing Stable 0 0 500 0 0 0.4 Contract -30000 -30000 Optimal Strategy: Expand Exisiting Plant. -30000 ID 0 0 3 0 0 0 0 10 11 12 Name 0 TreePlan 1 2 3 4 5 6 7 8 9 10 11 12 Value Prob 0 Pred 0 0 0 0 Kind 0D 0E 0E 0E 1T 1T 1T 2T 2T 2T 3T 3T 3T NS S1 3 3 3 3 0 0 0 0 0 0 0 0 0 S2 1 4 7 10 0 0 0 0 0 0 0 0 0 S3 2 5 8 11 0 0 0 0 0 0 0 0 0 S4 3 6 9 12 0 0 0 0 0 0 0 0 0 S5 0 0 0 0 0 0 0 0 0 0 0 0 0 Row 0 0 0 0 0 0 0 0 0 0 0 0 0 Col 22 7 22 37 2 7 12 17 22 27 32 37 42 Mark 1 5 5 5 9 9 9 9 9 9 9 9 9 TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE Publish 0 58333.33 0.21 Very Strong Publish 0 58333.33 Not Publish 0 0 0 45000 Publish 0.28 Moderately Strong Publish 0 45000 Not Publish 0 0 0 17500 Conduct Survey 0 29310.34 Publish 0.28 Fair Publish 0 17500 Not Publish 0 0 Conduct Survey 0 -24285.71 Publish 29310.34 0.24 Poor Not Publish 0 0 Not Publish 0 0 0.2 Very Strong 100000 100000 0.2 Moderately Strong Publish 50000 0 10000 50000 0.2 Fair 0 0 No Survey Publish 0 0.4 10000 Poor -50000 -50000 Not Publish 0 0 Optimal Strategy: Conduct Survey. If the result is "very strong", then publish. If moderately strong, then publish. If fair, then publish. If poor, then The company should be willing to pay (up to) the difference between E54 and E117. 0.43 Very Strong 100000 100000 Survey Indication 100000 0.4 Moderately Strong Very strong Very strong 13 Moderately strong 10 Fair 5 Poor 1 Actual Performance Moderately strong 12 20 12 3 Very strong Very strong 0.43 Moderately strong 0.25 Fair 0.13 Poor 0.03 Actual Performance Moderately strong 0.4 0.5 0.3 0.09 50000 50000 50000 Fair 0 0 0 0.1 Poor -50000 -50000 -50000 0 0.25 Very Strong 100000 100000 100000 0.5 Moderately Strong 50000 50000 50000 0.15 Fair 0 0 0 0.1 Poor -50000 -50000 -50000 Survey Indication 0.07 0 0.13 Very Strong 100000 100000 100000 0.3 Moderately Strong 50000 50000 50000 0.38 Fair 0 0 0 0.2 Poor -50000 -50000 -50000 0 0.03 Very Strong 100000 100000 100000 0.09 Moderately Strong 50000 50000 50000 0.26 Fair 0 0 0 0.63 Poor -50000 -50000 -50000 0 100000 50000 0 -50000 0 then publish. If poor, then do not publish. Actual Performance Fair Poor 2 6 15 9 3 4 8 22 30 40 40 35 145 0.1 0.1 0.2 0.63 1 1 1 1 Actual Performance Fair 0.07 0.15 0.38 0.26 Poor 0.21 0.28 0.28 0.24 ID 0 0 0 0 0 0 0 Name 0 TreePlan 1 2 3 4 5 6 Value Prob 0 Pred 0 0 0 Kind 0D 0E 0D 1D 1D 1D 1D 0 0 0 0 13 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 31 32 33 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 0 0 0 0 0 0 0 0 0 0 3E 11 T 4E 4T 5E 5T 6E 6T 7T 7T 7T 7T 13 T 13 T 13 T 13 T 9T 9T 9T 9T 11 T 11 T 11 T 3T 2E 2T 31 T 31 T 31 T 31 T NS S1 2 4 2 2 2 2 2 S2 1 3 31 7 9 11 13 S3 2 4 32 30 10 12 14 S4 0 5 0 0 0 0 0 S5 0 6 0 0 0 0 0 Row 0 0 0 0 0 0 0 Col 83 52 115 15 40 65 90 Mark 1 5 5 9 9 9 9 TRUE TRUE TRUE TRUE TRUE TRUE TRUE 4 0 4 0 4 0 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 0 0 0 0 0 15 0 23 0 27 0 22 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 33 0 0 0 0 0 16 0 24 0 28 0 21 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 34 0 0 0 0 0 17 0 25 0 29 0 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 35 0 0 0 0 0 18 0 26 0 8 0 19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 36 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 67 34 47 59 72 84 97 2 7 12 17 92 87 82 77 27 32 37 42 52 57 62 22 109 122 102 107 112 117 13 17 13 13 13 13 13 13 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 13 9 9 13 13 13 13 TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE Decision Tree (There is no Imitator in 2nd year) 0.3 High No Test Market -30000000 100000000 70000000 700000 0.7 Low 1000000 ### Test Market in SC 6575000 0.3 High 20750000 20750000 Test Market in SC 0 6575000 0.7 Low 500000 Answers Part (a) Part (b) Part ( c) 700000 Expected Profit w/o test Expected Profit with test So we want to test the market. We do not want to test the market. 700000 6575000 500000 Decision Tree (There is a potential Imitator in 2nd ye factory investment -30000000 Unit profit 50 0.3 High 70000000 No Test Market -30000000 100000000 700000 0.7 Low ### 1000000 No Test Market 700000 0.3 High in SC 20750000 750000 Test Market in SC 0 -175000 0.7 Low in SC 500000 500000 875000 Imitator in 2nd year) 70000000 70000000 ### ### 0.6 QIE enters ### -17500000 -1750000 ### 0.4 QIE does not 20750000 20000000 20750000 500000 500000 ID Name Value 0 TreePlan 1 2 3 4 5 6 7 8 Prob 0 Pred 0 0 0 Kind 0D 0E 0E 1T 1T 2E 2T 5T 5T NS 2 2 2 0 0 2 0 0 0 S1 S2 1 3 5 0 0 7 0 0 0 S3 2 4 6 0 0 8 0 0 0 S4 0 0 0 0 0 0 0 0 0 S5 0 0 0 0 0 0 0 0 0 Row 0 0 0 0 0 0 0 0 0 Col 11 4 18 2 7 14 22 12 17 Mark 1 TRUE 5 TRUE 5 TRUE 9 TRUE 9 TRUE 9 TRUE 9 TRUE 13 TRUE 13 TRUE ...
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This note was uploaded on 09/11/2011 for the course BUAD 311 taught by Professor Vaitsos during the Spring '07 term at USC.

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