Streaming of YouTube videos became increasing popular as the costs of cable and satellite television have surged over the last 10 years. For instance, during the coronavirus pandemic, a YouTube series about home workouts gained immense popularity as pandemic restrictions required people to stay at home and social distance as fitness facilities around Canada closed their doors. It is estimated that this YouTube series was watched by over 34.4 million people within the first 10 days of its release. However, as viewers explored various content during the stay-at-home restrictions, the competition amongst YouTube content creators became more intense, with many seeking the next viral idea.

You are the content manager at Cloudy Day Studios in Toronto and are responsible for reviewing YouTube pitches and deciding what content ideas the studio should invest in and produce. You recently have received three proposals for a new YouTube series, each distinct in their genre: a DIY home improvement series, a 'van life' vlog series, and a cooking show. The potential ad revenue for each series is shown below (Table 1) and are based on upcoming market conditions.

Table 1: Profit for YouTube Series based on Market Conditions (in millions of dollars)

	Market Condition A	Market Condition B	Market Condition C
DIY Home Improvement	9	10	12
'Van Life' Vlog	14	7	10
Cooking Show	11	10	8

 

Using only the information presented above, answer the following questions:

1. Apply an optimistic decision criterion to make your decision and show your work.  
2. Apply a pessimistic decision criterion to make your decision and show your work.  
3. Apply the equal likelihood decision criterion to make your decision and show your work 
4. Apply the Minimax Regret decision criterion to make your decision and show your work.  
5. Imagine that you are able to hire an analyst who has experience to tell you what type of market condition you might be able to anticipate in the future. The analyst suggests that Market Condition A will occur with half of the chance of Market Condition B, and Market Condition C will be two and a half times that of Market Condition B. What is the expected opportunity loss (EOL)? Show your work. (8 Points)
6. What is the expected value of perfect information (EVPI)? Justify/show your work. 

Answer rating: 100% (QA)

To make decisions using different decision criteria well start by defining each criterion Optimistic Decision Criterion Choose the option with the hig... View the full answer