Answer the question: TOPIC: 6. TOPIC: 7. Computing branch probabilities Dollar Department Stores has just acquired the

Answer the question:

 

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TOPIC: 6. TOPIC: 7. Computing branch probabilities Dollar Department Stores has just acquired the chain of Wenthrope and Sons Custom Jewelers. Dollar has received an offer from Harris Diamonds to purchase the Wenthrope store on Grove Street for $120,000. Dollar has determined probability estimates of the store's future profitability, based on economic outcomes, as: P($80,000) 2, P($100,000)=.3, P($120,000) .1, and P($140,000) = .4. a. b. C. Should Dollar sell the store on Grove Street? What is the EVPI? Dollar can have an economic forecast performed, costing $10,000, that produces indicators /1 and 12, for which P(11 | 80,000) = .1; P(/1 | 100,000)=.2; P(1 | 120,000) - .6; P(1 | 140,000)=.3. Should Dollar purchase the forecast? Computing branch probabilities An appliance dealer must decide how many (if any) new microwave ovens to order for next month. The ovens cost $220 and sell for $300. Because the oven company is coming out with a new product line in two months, any ovens not sold next month will have to be sold at the dealer's half price clearance sale. Additionally, the annliance dealer feels he suffers a loss of $25 for even oven demandad wh TOPIC: 6. TOPIC: 7. Computing branch probabilities Dollar Department Stores has just acquired the chain of Wenthrope and Sons Custom Jewelers. Dollar has received an offer from Harris Diamonds to purchase the Wenthrope store on Grove Street for $120,000. Dollar has determined probability estimates of the store's future profitability, based on economic outcomes, as: P($80,000) 2, P($100,000)=.3, P($120,000) .1, and P($140,000) = .4. a. b. C. Should Dollar sell the store on Grove Street? What is the EVPI? Dollar can have an economic forecast performed, costing $10,000, that produces indicators /1 and 12, for which P(11 | 80,000) = .1; P(/1 | 100,000)=.2; P(1 | 120,000) - .6; P(1 | 140,000)=.3. Should Dollar purchase the forecast? Computing branch probabilities An appliance dealer must decide how many (if any) new microwave ovens to order for next month. The ovens cost $220 and sell for $300. Because the oven company is coming out with a new product line in two months, any ovens not sold next month will have to be sold at the dealer's half price clearance sale. Additionally, the annliance dealer feels he suffers a loss of $25 for even oven demandad wh