Visual Park is considering marketing one of its two television models for coming Christmas season: Model A or Model B. Model A is a unique featured television and appears to have no competition. Estimated profits (in thousand dollars) under high, medium, and low demand are given below:

Visual Park is optimistic about the TV Model B. However, the concern is that profitability will be affected if a competitor launches a TV model which has similar features as Model B. Estimated profits (in thousand dollars) with and without competition is as follows:

a. Develop a decision tree for the Visual Park problem.
b. For planning purposes, Visual Park believes there is a 0.7 probability that its competitor will launch a TV model similar to Model B. Given this probability of competition, the director of planning recommends marketing the Model A. Using expected value, what is your recommended decision?
c. Show a risk profile for your recommended decision.
d. Use sensitivity analysis to determine the probability of competition for Model B would have to be for you to change your recommended decision alternative.

Question

Visual Park is considering marketing one of its two television models for coming Christmas season: Model A or Model B. Model A is a unique featured television and appears to have no competition. Estimated profits (in thousand dollars) under high, medium, and low demand are given below:
  
Visual Park is optimistic about the TV Model B. However, the concern is that profitability will be affected if a competitor launches a TV model which has similar features as Model B. Estimated profits (in thousand dollars) with and without competition is as follows:
  
  a. Develop a decision tree for the Visual Park problem.
b. For planning purposes, Visual Park believes there is a 0.7 probability that its competitor will launch a TV model similar to Model B. Given this probability of competition, the director of planning recommends marketing the Model A. Using expected value, what is your recommended decision?
c. Show a risk profile for your recommended decision.
d. Use sensitivity analysis to determine the probability of competition for Model B would have to be for you to change your recommended decision alternative.

Quizplus · Accepted Answer

The Answer of Visual Park is considering marketing one of its two television models for coming Christmas season: Model A or Model B. Model A is a unique featured television and appears to have no competition. Estimated profits (in thousand dollars) under high, medium, and low demand are given below:
  
Visual Park is optimistic about the TV Model B. However, the concern is that profitability will be affected if a competitor launches a TV model which has similar features as Model B. Estimated profits (in thousand dollars) with and without competition is as follows:
  
  a. Develop a decision tree for the Visual Park problem.
b. For planning purposes, Visual Park believes there is a 0.7 probability that its competitor will launch a TV model similar to Model B. Given this probability of competition, the director of planning recommends marketing the Model A. Using expected value, what is your recommended decision?
c. Show a risk profile for your recommended decision.
d. Use sensitivity analysis to determine the probability of competition for Model B would have to be for you to change your recommended decision alternative.

Visual Park Is Considering Marketing One of Its Two Television