Aaliyah Brown owns a small bakery named Sweet Delights and is considering expanding her product line...

 

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Aaliyah Brown owns a small bakery named Sweet Delights and is considering expanding her product line with different dessert options. She's presented with the following alternatives: Dessert Good Market Profit ($) Poor Market Profit (S) Cupcake Bliss 25,000 -10,000 Chocolate Delight 30,000 -15,000 Fruit Tart 15,000 -5,000 For example, if Aaliyah chooses 'Cupcake Bliss' dessert and if there is a favorable market, she will realize a profit of $25,000. On the other hand, if the market is unfavorable, Aaliyah will suffer a loss of $10,000. Aaliyah has always been a very optimistic decision maker. a. What type of decision is Aaliyah facing? b. What decision criterion should Aaliyah use as an optimistic decision maker? c. Which dessert alternative is the best according to the decision criterion in (b)? d. If a pessimistic approach is used, what criterion should be used? e. If Aaliyah is using a pessimistic approach, which dessert alternative should be chosen? Why? 3. [15 points] Refer Problem 2. Aaliyah came across market research results for her business area and found out that during inflationary economies, more consumers will buy small luxuries such as desserts. According to the predictions, the chance of a good market for desserts is 75%. Aaliyah would like to use these probabilities in determining the best dessert. a. With the new information, what decision model should be used? b. What is the best dessert choice now? What is the expected profit? 4. [15 points] The marketing manager of a coffee shop chain believes that the number of social media posts about their new specialty drink is related to the total sales of that drink. The manager has collected the following data: Social Media Posts Drink Sales 10 550 15 620 20 740 25 885 30 965 35 990 a. Calculate the Total Sum of Squares (SST), the Sum of Squares due to Error (SSE), and the Sum of Squares due to Regression (SSR) using the equations presented in this chapter or Excel tools. Briefly explain what each number means. b. Determine the equation for the least-squares regression line. c. Using the regression equation, predict the drink sales if there were 28 social media posts about the drink. Aaliyah Brown owns a small bakery named Sweet Delights and is considering expanding her product line with different dessert options. She's presented with the following alternatives: Dessert Good Market Profit ($) Poor Market Profit (S) Cupcake Bliss 25,000 -10,000 Chocolate Delight 30,000 -15,000 Fruit Tart 15,000 -5,000 For example, if Aaliyah chooses 'Cupcake Bliss' dessert and if there is a favorable market, she will realize a profit of $25,000. On the other hand, if the market is unfavorable, Aaliyah will suffer a loss of $10,000. Aaliyah has always been a very optimistic decision maker. a. What type of decision is Aaliyah facing? b. What decision criterion should Aaliyah use as an optimistic decision maker? c. Which dessert alternative is the best according to the decision criterion in (b)? d. If a pessimistic approach is used, what criterion should be used? e. If Aaliyah is using a pessimistic approach, which dessert alternative should be chosen? Why? 3. [15 points] Refer Problem 2. Aaliyah came across market research results for her business area and found out that during inflationary economies, more consumers will buy small luxuries such as desserts. According to the predictions, the chance of a good market for desserts is 75%. Aaliyah would like to use these probabilities in determining the best dessert. a. With the new information, what decision model should be used? b. What is the best dessert choice now? What is the expected profit? 4. [15 points] The marketing manager of a coffee shop chain believes that the number of social media posts about their new specialty drink is related to the total sales of that drink. The manager has collected the following data: Social Media Posts Drink Sales 10 550 15 620 20 740 25 885 30 965 35 990 a. Calculate the Total Sum of Squares (SST), the Sum of Squares due to Error (SSE), and the Sum of Squares due to Regression (SSR) using the equations presented in this chapter or Excel tools. Briefly explain what each number means. b. Determine the equation for the least-squares regression line. c. Using the regression equation, predict the drink sales if there were 28 social media posts about the drink.

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