Refer to Exercise 41. Suppose you learn that Campbell is building a new plant. Use Bayes’ theorem to determine the probability that Campbell plans to introduce the new product. (Let A1 represent the event “Campbell introduces a new product”; let A2 represent the event “Campbell doesn’t introduce a new product”; let B represent the event “Campbell builds a new plant.”)
In Exercise 41
As Marketing Director at the Hauck Corporation, you try to keep informed about the actions of your main competitor, Campbell Labs. Currently you believe that Campbell may have plans to introduce a significant new product within the next two years. You put the chance of that happening at 30%. You also believe that if Campbell is planning to introduce a new product, there’s a 60% chance that they will build a new plant. If a new product wasn’t being planned, you estimate that the chance Campbell would build a new plant is only 10%. Draw a probability tree and use it to answer the following questions