Conditional Probability question
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A manufacturing company is trying to decide whether to add a new product line and the marketing department has been asked to help with this decision. Information on previous products produced indicates that 10% are huge successes, 20% are modest successes, 40% break even, and 30% are losers. However before the product decision is made, the product will be reviewed. In the past, 99% of the huge successes received favorable reviews, 70% of the moderate successes received favorable reviews, 40% of the break-even products received favorable reviews, and 20% of the losers received favorable reviews.
a. If the proposed product receives a favorable review, how should the marketing department revise the probabilities of the various out-comes to take this information into account?
b. What proportion of the products received favorable reviews?
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Solution Summary
Calculate probability of different outcomes conditional on favorable reviews
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A manufacturing company is trying to decide whether to add a new product line and the marketing department has been asked to help with this decision. Information on previous products produced indicates that 10% are huge successes, 20% are modest successes, 40% break even, and 30% are losers. However before the product decision is made, the product will be reviewed. In the past, 99% of the huge successes received favorable reviews, 70% of the moderate successes received favorable reviews, 40% of the break-even products received favorable reviews, and 20% of the losers received favorable reviews. (Show your work and ...
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