5 a b c

please do not ignore the question, i really disappointed some chegg's expert attitude

the basis of pre , in a region of Western Australia. On that would justify commercial investment in the region. Further research is then there is a 60% probability that a particular mineral will be found in quantities will be found. It is estimated that this research has a 75% chance of giving a carried out and this suggests that commercially viable quantities of the mineral correct indication. Revise the senior geologist's prior probability in the light of 15 A company which manufactures compact discs has found that demand for its product has been increasing rapidly over the last 12 months. A decision now has to be made as to how production capacity can be expanded to meet this demand. Three alternatives are available: (iii) Subcontract the extra work to another manufacturer. (ii) Build a new plant in an industrial development area. The returns which would be generated by each alternative over the next 5 years have been estimated using three possible scenarios: (i) Demand rising at a faster rate than the current rate. a) Expand the existing plant. the research (H) Demand continuing to rise at the current rate. ii) Demand increasing at a slower rate or falling. These estimated returns, which are expressed in terms of net present value, are shown below (net present values in $000s): Scenario Demand rising faster Demand rising at current rate Course of action Demand increasing slowly or falling Expand -150 Build new plant Subcontract 500 700 200 400 200 150 -300 --50 (a) The company's marketing manager estimates that there is a 60% chance that demand will rise faster than the current rate, a 30% chance that it will con- tinue to rise at the current rate and a 10% chance that it will increase at a slower rate or fall. Assuming that the company's objective is to maximize expected net present value, determine (1) The course of action which it should take. (ii) The expected value of perfect information. EX 242 present (b) Before the decision is made, the results of a long-term forecast become avale able. These suggest that demand will continue to rise at the Estimates of the reliability of this forecast are given below: P(forecast predicts demand increasing at current rate when actual demand will rise at faster rate) = 0.3 when actual demand will continue to rise at the current rate) = 0.7 p(forecast predicts demand increasing at current rate p(forecast predicts demand increasing at current rate when Determine whether the company should, in the light of the forecast, change (c) Discuss the limitations of the analysis you have applied above and suggest (6) The managers of a soft drinks company are planning their production strategy ways in which these limitations could be overcome. actual demand will rise at a slower rate or fall) = 0.4 from the decision you advised in (a). for next summer . The demand for their products is closely linked to the weather and an analysis of weather records suggests the following probability distribu tion for the June to August period: Weather conditions Probability Hot and dry Mixed Cold and wet 0.3 0.5 0.2 1.0 The table below shows the estimated profits ($000s) which will accrue for the different production strategies and weather conditions: Weather conditions Production strategy Hot and dry Mixed Cold and wet Plan for high sales Plan for medium sales Plan for low sales 400 200 110 100 180 100 -100 70 90