The Jamis Corporation is involved with waste management. During the past 10 years it has become one
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With a medium demand, the large facility will return only $400,000. Bob estimates that the large facility would be a big loser if there were a low demand for waste treatment. He estimates that he would lose approximately $200,000 with a large treatment facility if demand were indeed low. Looking at the economic conditions for the upper part of the state of Mississippi and using his experience in the field Bob estimates that the probability of a low demand for treatment plants is 0.15. The probability for a medium-demand facility is approximately 0.40, and the probability of a high demand for a waste treatment facility is 0.45. Because of the large potential investment and the possibility of a loss, Bob has decided to hire a market research team that is based in Jackson, Mississippi. This team will perform a survey to get a better feeling for the probability of a low, medium, or high demand for a waste treatment facility. The cost of the survey is $50,000. To help Bob determine whether to go ahead with the survey, the marketing research firm has provided Bob with the following information:
As you see, the survey could result in three possible outcomes. Low survey results mean that a low demand is likely. In a similar fashion, medium survey results or high survey results would mean a medium or a high demand, respectively. What should Bobdo?
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Quantitative Analysis for Management
ISBN: 978-0132149112
11th Edition
Authors: Barry render, Ralph m. stair, Michael e. Hanna
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