Many airlines flying overseas have recently considered changing the kinds of goods they sell at their in-flight duty-free services. Swiss, for example, is considering selling watches instead of the usual liquor and cigarettes. A Swiss executive believes that there is a 0.60 chance that passengers would prefer these goods to the usual items and those revenues from in-flight sales would increase by $500,000 over a period of several years. She believes there is a 0.40 chance that revenues would decrease by $700,000, which would happen should people not buy the watches and instead desire the usual items. Testing the new idea on actual flights would cost $60,000, and the results would have a 0.85 probability of correctly detecting the state of nature. What should Swiss do?
Answer to relevant QuestionsThe magazine Inc. recently surveyed managers to determine the proportion of managers who participate in planning meetings. Consider the following prior probability distribution for this proportion. Proportion ...Recent years have seen a sharp decline in the Alaska king crab fishery. One problem identified as a potential cause of the decline has been the prevalence of a deadly parasite believed to infect a large proportion of the ...Money suggests an interesting decision problem for family investments. Start with $50,000 to invest over 20 years. There are two possibilities: a low-cost index fund and a fixed-interest investment paying 6.5% per year. The ...Beer sales in a tavern are cyclical over the week, with large volume during weekend nights, lower volume during the beginning of the week, and somewhat higher volume at midweek. Explain the possible problems that could ...Last year, consumers increasingly bought fleece (industry jargon for hot selling jogging suits, which now rival jeans as the uniform for casual attire). A New York designer of jogging suits is interested in the new trend and ...
Post your question