The Galewinds & Co. Company must decide whether it should purchase a component from a supplier...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Galewinds & Co. Company must decide whether it should purchase a component from a supplier or manufacture the component at its' own plant. If demand is high, it would be to the company's advantage to manufacture the component. However, if demand is low, the cost of unit manufacturing will be high due to underutilization. According to the company's current estimate the probability of low demand is about 0.28 and the probability of high demand is approximately 0.72. Then, the Galewinds & Co. Company has decided to hire a professional economic analyst who will provide additional information about demand level. Based on the analyst's past record, the company has estimated 0.83 probability that the analyst would present a favorable report given the demand is actually high, and 0.94 probability that the analyst would present an unfavorable report given the demand is actually low. (a) If the analyst provides a favorable report (predicting high demand), how then would the Galewinds & Co. Company estimate the probability of high demand? Find the answer using the following revised probability table. Please round the values of joint, posterior probabilities, and probability of favourable report to four decimal places. State of Nature Low High Probability Revisions given a Favorable Report Prior Conditional Probability Joint Probability P(Fav./State of Nature) Probability P(Favourable) P(High demand Favourable report ) H Posterior Probability P(State of Nature/Fav.) 1.0000 The Galewinds & Co. Company must decide whether it should purchase a component from a supplier or manufacture the component at its' own plant. If demand is high, it would be to the company's advantage to manufacture the component. However, if demand is low, the cost of unit manufacturing will be high due to underutilization. According to the company's current estimate the probability of low demand is about 0.28 and the probability of high demand is approximately 0.72. Then, the Galewinds & Co. Company has decided to hire a professional economic analyst who will provide additional information about demand level. Based on the analyst's past record, the company has estimated 0.83 probability that the analyst would present a favorable report given the demand is actually high, and 0.94 probability that the analyst would present an unfavorable report given the demand is actually low. (a) If the analyst provides a favorable report (predicting high demand), how then would the Galewinds & Co. Company estimate the probability of high demand? Find the answer using the following revised probability table. Please round the values of joint, posterior probabilities, and probability of favourable report to four decimal places. State of Nature Low High Probability Revisions given a Favorable Report Prior Conditional Probability Joint Probability P(Fav./State of Nature) Probability P(Favourable) P(High demand Favourable report ) H Posterior Probability P(State of Nature/Fav.) 1.0000
Expert Answer:
Answer rating: 100% (QA)
ANSWER Solution PL 028 P FL 1094 006 PH 072P FH 083 PF PL P FL PHP FH pHF PH P FH ... View the full answer
Related Book For
OM4 operations management
ISBN: 978-1133372424
4th edition
Authors: David Alan Collier, James R. Evans
Posted Date:
Students also viewed these accounting questions
-
List three specific parts of the Case Guide, Objectives and Strategy Section (See below) that you had the most difficulty understanding. Describe your current understanding of these parts. Provide...
-
The Gorman Manufacturing Company must decide whether to purchase a component part from a supplier or to manufacture the component at its own plant. If demand is high, it would be to Gorman's...
-
There are 38 numbers in the game of roulette. They are 00, 0, 1, 2, . . ., 36. Each number has an equal chance of being selected. In the game, the winning number is found by a spin of the wheel. Say...
-
Obihiro Group has equipment with an original cost of 500,000,000 and related accumulated depreciation of 100,000,000 on December 31, 2019. The fair value of the equipment at December 31, 2019, is...
-
Wageweb conducts surveys of salary data and presents summaries on its website. Based on salary data as of October 1, 2002, Wageweb reported that the average annual salary for sales vice presidents...
-
Is the development life cycle over with deployment?
-
Data for investments in stock classified as trading securities are presented in E16-10. Assume instead that the investments are classified as available-for-sale securities. They have the same cost...
-
How does ethical leadership transcend traditional paradigms of authority, emphasizing moral principles and values to inspire trust, foster transparency, and cultivate a culture of integrity within...
-
Problem 9 (50 Points) An air-cooled aluminum heat sink is used to keep electronics cool (see image and diagram). The cooling requirements are being significantly increased. To increase the rate of...
-
Excellent Writer produces and sell boxes of signing pens for P1,000 per box. Direct materials are P400 per box and direct manufacturing labor averages P75 per box. Variable overhead is P25 per box...
-
What are examples of leadership artifacts to include in a leadership portfolio? Provide a description and and how the artifact is important to leadership
-
Develop a leadership philosophy statement. Begin by reviewing your self-assessment results from Topic 2 and reflect on what you have learned about effective leadership and conscious capitalism in the...
-
Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor. Carlise has total overhead of $ 1 3 1 , 9 6 4 . Carlise has identified the following...
-
Prepaid Insurance $ 6 , 1 6 0 Supplies 5 , 1 3 0 Equipment 4 5 , 6 0 0 Accumulated Depreciation Equipment $ 1 4 , 3 6 4 Notes Payable 2 8 , 5 0 0 Unearned Rent Revenue 1 2 , 6 5 4 Rent Revenue 1 0 2...
-
Capital Gains Tax. Joel is in the 22% tax bracket. What amount of taxes will he pay on his capital gain if he held the stock for less than a year? Return on Stock. Joel purchased 100 shares of stock...
-
Right of Return. Use the following information to answer Q5a, Q5b and Q5c. On Nov 2, 2019, the Fine Metal Co. sold Precision Inc, 200 tool sets at a price of $50 each [cost $30 per set] terms n/60....
-
Maria Castigliani is head of the purchasing department of Ambrosiana Merceti, a medium-sized construction company. One morning she walked into the office and said, The main problem in this office is...
-
In Problem 10, assume the cost factors given have not changed. A marketing representative of NEW-SPEC, a firm that specializes in providing manual inspection processes for other firms, approached...
-
Consider again the problem faced by the Beck Company R&D manager (Problem 9). Suppose an experiment can be conducted to shed some light on the technical feasibility of the project. There are three...
-
1. Use these cost, revenue, and probability estimates along with the decision tree to identify the best decision strategy for Trendy's Pies. 2. Suppose that Trendy is concerned about her probability...
-
W hat is diauxic growth? Explain the roles of cAMP and CAP in this process.
-
What is antisense RNA? How does it affect the translation of a complementary mRNA?
-
What are the functions of activator proteins and repressor proteins in transcription? Explain how these proteins work at the molecular level.
Study smarter with the SolutionInn App