A film production company is considering producing a pilot for a comedy series in the hope...
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A film production company is considering producing a pilot for a comedy series in the hope of selling it to a major television network. The network may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, the film company may either produce the pilot and wait for the network's decision or transfer the rights for the pilot and series to a competitor for £150,000. the film company's decision alternatives and profits (in 000's of E's) are shown in the table below: Decision Alternatives Produce pilot, di Sell to competitor, d₂ (c) (d) Reject, $₁ -200 200 The probabilities for the states of nature are P(s) = 0.30, P(sz)= 0.30, and P(s) = 0.40. For a consulting fee of £10,000, an agency will review the plans for the comedy series and indicate the overall chances of a favourable network reaction to the series. Assume that the agency review will result in a favourable (F) or an unfavourable (U) review and that the following probabilities are relevant: P(F)=0.30 P(U) = 0.70 (e) (1) State of Nature 1 Year, $₂ 150 100 P(s: | F) = 0.05 P(Sz | F)=0.35 P(S3 | F) = 0.60 2 years, S 100 200 (a) Construct a decision tree for this problem. (b) Determine the recommended decision if the agency opinion is not used, and compute the expected value Compute the expected value of perfect information P/s: U)=0.50 P(Sz | U) = 0.35 P(S3 | U) = 0.15 What is the optimal decision strategy assuming the agency's information is used? Compute the expected value of the agency's information Discuss whether the agency's information is worth the £10,000 fee, and determine the maximum that the film company should be willing to pay for the information (g) What is the recommended decision? A film production company is considering producing a pilot for a comedy series in the hope of selling it to a major television network. The network may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, the film company may either produce the pilot and wait for the network's decision or transfer the rights for the pilot and series to a competitor for £150,000. the film company's decision alternatives and profits (in 000's of E's) are shown in the table below: Decision Alternatives Produce pilot, di Sell to competitor, d₂ (c) (d) Reject, $₁ -200 200 The probabilities for the states of nature are P(s) = 0.30, P(sz)= 0.30, and P(s) = 0.40. For a consulting fee of £10,000, an agency will review the plans for the comedy series and indicate the overall chances of a favourable network reaction to the series. Assume that the agency review will result in a favourable (F) or an unfavourable (U) review and that the following probabilities are relevant: P(F)=0.30 P(U) = 0.70 (e) (1) State of Nature 1 Year, $₂ 150 100 P(s: | F) = 0.05 P(Sz | F)=0.35 P(S3 | F) = 0.60 2 years, S 100 200 (a) Construct a decision tree for this problem. (b) Determine the recommended decision if the agency opinion is not used, and compute the expected value Compute the expected value of perfect information P/s: U)=0.50 P(Sz | U) = 0.35 P(S3 | U) = 0.15 What is the optimal decision strategy assuming the agency's information is used? Compute the expected value of the agency's information Discuss whether the agency's information is worth the £10,000 fee, and determine the maximum that the film company should be willing to pay for the information (g) What is the recommended decision?
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Answer rating: 100% (QA)
Decision Tree and Analysis for Film Production Company a Decision Tree RootProduce Pilot or Sell to Competitor Produce Pilot Left BranchNetwork Reject... View the full answer
Related Book For
Quantitative Methods for Business
ISBN: 978-0324651751
11th Edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam
Posted Date:
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