CProbability 8. Tim Toyne, president of the Tim Toyne Toy Company (a British firm) is currently...

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CProbability 8. Tim Toyne, president of the Tim Toyne Toy Company (a British firm) is currently trying to decide whether he should bring to market his new model toy truck called the T4 (Tim Toyne's Toy Truck). Tim is uncertain about both the potential market for this new toy, and the unit cost of producing it. The estimated net profit to be earned by this new toy depends on these two uncertain factors in the following manner (profit is expressed in millions of pounds): Unit Production Costs (pounds per unit) 1.0 1.5 2.0 Large 10.0 Small 2.0 -2.0 -4.0 Tim must decide within the next week whether or not he should go into production with the T4. If he decides against the introduction of the T4, he will invest his assets in a diversified mutual fund where the returns are also an uncertainty. Tim has asked you, his chief technical business analyst, to help him analyze this situation. You and your team view the market size and production cost as independent random variables and have assessed the following distributions for them: an 8.40 Market Size AN AN Market Size Large Small AM Probability 0.6 0.4 6.0 2.0 The subjective probabilities for various return levels for the mutual fund investment over the same period of time (in millions of pounds) has been assessed using Stuart Varney, a business and financial expert, with the following results: P(<4)=0.99 P(1)-0.75 P<0)=0.50 Production Cost 1.0 1.5 2.0 P<-1)=0.25 P(-2) = 0.01 To assist Tim in his decision, you ask him about his attitude toward risk and he replies, "If you take a big risk you will have a big loss but if you take a small risk you will have only a small loss. Therefore I am neutral toward risk!" He then asks you to answer his basic question, (i.e. which strategy is best?) by Tuesday, December 14, 2021. Graphing paper is attached if you think you need it. When you have finished Part 1 turn it in to receive Part 2 which is a continuation of the Tim Toyne Toy Truck problem. (12 points) 1000 40 030 4:30 400 Probability 0.2 B 0.3 0.5 Complementary Cumulative Probably CProbability 8. Tim Toyne, president of the Tim Toyne Toy Company (a British firm) is currently trying to decide whether he should bring to market his new model toy truck called the T4 (Tim Toyne's Toy Truck). Tim is uncertain about both the potential market for this new toy, and the unit cost of producing it. The estimated net profit to be earned by this new toy depends on these two uncertain factors in the following manner (profit is expressed in millions of pounds): Unit Production Costs (pounds per unit) 1.0 1.5 2.0 Large 10.0 Small 2.0 -2.0 -4.0 Tim must decide within the next week whether or not he should go into production with the T4. If he decides against the introduction of the T4, he will invest his assets in a diversified mutual fund where the returns are also an uncertainty. Tim has asked you, his chief technical business analyst, to help him analyze this situation. You and your team view the market size and production cost as independent random variables and have assessed the following distributions for them: an 8.40 Market Size AN AN Market Size Large Small AM Probability 0.6 0.4 6.0 2.0 The subjective probabilities for various return levels for the mutual fund investment over the same period of time (in millions of pounds) has been assessed using Stuart Varney, a business and financial expert, with the following results: P(<4)=0.99 P(1)-0.75 P<0)=0.50 Production Cost 1.0 1.5 2.0 P<-1)=0.25 P(-2) = 0.01 To assist Tim in his decision, you ask him about his attitude toward risk and he replies, "If you take a big risk you will have a big loss but if you take a small risk you will have only a small loss. Therefore I am neutral toward risk!" He then asks you to answer his basic question, (i.e. which strategy is best?) by Tuesday, December 14, 2021. Graphing paper is attached if you think you need it. When you have finished Part 1 turn it in to receive Part 2 which is a continuation of the Tim Toyne Toy Truck problem. (12 points) 1000 40 030 4:30 400 Probability 0.2 B 0.3 0.5 Complementary Cumulative Probably

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Answer To assist Tim in making his decision regarding the introduction of the T4 toy truck we need t... View the full answer