Many airlines flying overseas have recently considered changing the kinds
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?
Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help