QUESTION 4: Expected value Applied to Business Application (20 points) A Manufacturing Company must make a decision regarding the level of sales and dedication to a new product. There are 2 possible decisions to be evaluated. The potential profit from each decision alternative depends on the market acceptance which may be high, medium or low. If market acceptance is high, each of the two decision alternatives, di and d2, will yield a profit of 190 and 110 thousand dollars respectively. If the demand turns out to be medium, then the profits will be 140 and 80 thousand dollars respectively. Low demand will give -30 and 20 as for dl and d2 respectively. The prior probability estimates of demand to be high, medium and low are 0.45,0.35 and 0.2 respectively. The company first needs to decide whether to hire a consultant to obtain more accurate information regarding the future demand levels or not. The consultant will provide an either favorable or unfavorable report. Graph the decision tree (6 points) and state the decision strategy using the following probabilities: (10 points) P(F) = 0.6 P(low |F) = 0.1 P(Med | F) = 0.25 P(High | F) = 0.65 PU) = 0.4 P(low | U)= 0.35 P(Med t) = 0.45 P(High | U) = 0.2 22 minutes on slide Calculate the worth of the market research study. (4 points) Tag: YT10