Use the information below to answer the following question(s). Below is a decision tree illustrating the R&D process for a new drug. Let us assume that if market is large, payoff is lognormally distributed with a mean of $4,900 million and a standard deviation of $1,000 million; if market is medium, payoff is lognormally distributed with a mean of $2,500 million and a standard deviation of $500 million; and if market is small, payoff is normally distributed with a mean of $1,800 million and standard deviation of
$200 million. Let us also assume that the cost of clinical trials is uncertain and estimates are modeled with a triangular distribution with a minimum of -$700 million, a most likely value of - $550 million, and a maximum of -$500 million. Use 10,000 trials and a random seed of 1.
-What is the value of mode obtained from the simulation results? [Hint: Choose the approximate value.]
A) $ 119.0
B) $ 116.1
C) $ 105.7
D) $ 94.1

Question

Use the information below to answer the following question(s). Below is a decision tree illustrating the R&D process for a new drug.  Let us assume that if market is large, payoff is lognormally distributed with a mean of $4,900 million and a standard deviation of $1,000 million; if market is medium, payoff is lognormally distributed with a mean of $2,500 million and a standard deviation of $500 million; and if market is small, payoff is normally distributed with a mean of $1,800 million and standard deviation of
$200 million. Let us also assume that the cost of clinical trials is uncertain and estimates are modeled with a triangular distribution with a minimum of -$700 million, a most likely value of -  $550 million, and a maximum of -$500 million. Use 10,000 trials and a random seed of 1.
-What is the value of mode obtained from the simulation results? [Hint: Choose the approximate value.]
A) $ 119.0 
B) $ 116.1 
C) $ 105.7 
D) $ 94.1

Quizplus · Accepted Answer

The Answer of Use the information below to answer the following question(s). Below is a decision tree illustrating the R&D process for a new drug.  Let us assume that if market is large, payoff is lognormally distributed with a mean of $4,900 million and a standard deviation of $1,000 million; if market is medium, payoff is lognormally distributed with a mean of $2,500 million and a standard deviation of $500 million; and if market is small, payoff is normally distributed with a mean of $1,800 million and standard deviation of
$200 million. Let us also assume that the cost of clinical trials is uncertain and estimates are modeled with a triangular distribution with a minimum of -$700 million, a most likely value of -  $550 million, and a maximum of -$500 million. Use 10,000 trials and a random seed of 1.
-What is the value of mode obtained from the simulation results? [Hint: Choose the approximate value.]
A) $ 119.0 
B) $ 116.1 
C) $ 105.7 
D) $ 94.1

Use the Information Below to Answer the Following Question(s)