PRACTICE 3DMUR only

Hudson Realty is considering a boost in advertising in order to reduce a large inventory of unsold houses.The management plans to make its media decision using the following data on the expected success of newspaper versus pamphlet promotions.Each promotion strategy requires the sane amount of capital:

ALTERNATIVES:A:NewspaperB: Pamphlet

EVENTS:e₁e₂e₃e₁e₂e₃

NET PROFITS:3000700011000500070009000

PROBABILITIE:.3.50.2.2.50.3

1.Construct a decision tree and show which promotion alternative you would chose by using the expected value method (Xbar)?

2.Calculate the coefficient of variation of each alternative, and determine which one should be chosen accordingly?

3.Use theZ-table,and show the likelihood that Alternative A as well as Alternative B will yield a net profit between $6000 and $9000.

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DMUR:Results

Xbar

Sigma

CoV

Normal Dist. %

A

B

Be Sure

To Support

Your

Answers

(Give Reasons!)

Show all work! Use the table provided above for a RECAP of your results.Thetable has extra rows -- You will need them for Practice #5.Be sure to show your work, state a clear conclusion in each step and always support your answers.