Probability Modeling

Jul 16th, 2014
RockCafe
Category:
Mathematics
Price: $40 USD

Question description

The management of Red Cat Computers was considering launching a new product called the Tiger 100. The problem was that if a certain competitor had developed a new technology, as had been rumored, they would quickly blow the Tiger out of the water resulting in a loss of $700,000. The board of directors assessed the chance that the competitor had this technology at 60%. If the competitor did not have this technology the board anticipated profits of $1,500,000. Bill Doors, the chairman of the board and company founder, was not happy making a launch/no launch decision with such a high degree of uncertainty and asked “how can we get information about whether they have this technology or not?” Duey Cheetum, his slimeball assistant said, “There are a few ways we can go about it. As you know, we have used one of their ex-employees, Tom Bayes, to assist us in making assessments before. I think he’ll have a 75% chance of getting it right if we ask him. Let’s incorporate that possibility in our decision tree. He’ll probably want about $6,000 for supplying his expert opinion. I wonder if it’s worth it because even after we get his view there will still be some uncertainty. You know, I’m sure that for $60,000 we could hire someone inside their company to tell us for sure.” Draw the tree for Red Cat’s decision problem and determine the optimum decision based on expected values. Include the possibility of launching or not: 1) without information, 2) with Tom’s input and 3) using the industrial spy. Repeat using an exponential utility function with R=$1,500,000.

Tutor Answer

(Top Tutor) Daniel C.
(997)
School: UCLA
PREMIUM TUTOR

Studypool has helped 1,244,100 students

3 Reviews


Summary
Quality
Communication
On Time
Value
BlueOcean
Nov 16th, 2016
" Awesome! Exactly what I wanted. "
ashleyisgod
Oct 25th, 2016
" Top quality work from this guy! I'll be back! "
Molly_Moon
Oct 2nd, 2016
" AMAZING as always! "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1819 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors