Purchase Solution

Decision Analysis and Expected Profit

Not what you're looking for?

Ask Custom Question

Find the expected profit in the given question.

The Wilhelms Cola Company plans to market a new pineapple-flavored cola this summer. The decision is whether to package the cola in returnable or in no-return bottles. Currently, the state legislature is considering eliminating no-return bottles. Tybo Wilhelms, president of Wilhelms Cola Company has discussed the problem with his state representative and established the probability to be .70 that no-return bottles will be eliminated. The following table shows the estimated monthly profits (in thousands of dollars) if the pineapple cola is bottled in returnable versus no-return bottles. Of course, if the law is passed and the decision is to bottle the cola in no-return bottles, all profits would be from out-of-state sales. Compute the expected profit for both bottling decisions. Which decision do you recommend?

Alternative Law is passed S1 Law is not passed S2
Returnable bottle 80 40
No-return bottle 25 60

Attachments
Purchase this Solution
Solution Summary

This solution calculates the expected profit and which decision is more profitable.

Solution Preview

There is a .70 probability that no-return bottles will be eliminated (law is passed) and a .30 probability that no-return bottles will ...

Purchase this Solution
Free BrainMass Quizzes
Terms and Definitions for Statistics

This quiz covers basic terms and definitions of statistics.

Know Your Statistical Concepts

Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.

Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.

Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.

View More Free Quizzes
Related BrainMass Solutions

  • Product expected value approach-expected utility

    Using both criteria (expected value and utility approach) we are arriving at the same decision.

  • Decision Analysis

    Calculate the expected opportunity loss for each decision and determine the optimal decision. 2. An international manufacturer of electronic products is contemplating introducing a new type of compact disk player.

  • Decision Analysis

    Compute the expected value for each decision and select the best one. B. Develop the opportunitiy loss table and compute the expected opportunity loss for each product. C.

  • Decision Tree Analysis

    This posting contains a detailed decision tree analysis of a business situation with construction of decision tree, calculation of Posterior probabilities and Expected payoffs and choosing the best alternative among the available ones based on the analysis

  • What-if-analysis - Managerial Accounting

    A) If Tenneco goes with the decision its profit will reduce by $44,000.

  • Decision Analysis Problem

    The solution examines decision analysis problems. The expected monetary value is computed.

  • Decision Tree and Expected Values

    Draw a decision tree of the problem and determine the best solution and the expected net profit. See attached file. Draw a decision tree of the problem and determine the best solution and the expected net profit.

  • Prepare a differential analysis report: Devoe Construction

    During this period of the lease, Devoe Construction Company's cost of repairs, insurance, and property tax expenses are expected to be $36,000. a. Prepare a differential analysis report, dated January 3, 2010, for the lease or sell decision.

  • Decision Analysis: EMV & EVPI

    373146 Decision Analysis: EMV & EVPI See the attached file. An investor is to purchase one of three types of real estate. The investor must decide among an apartment building, an office building, and a warehouse.

  • Decision modeling for Mytrle Air Express

    Use graphical sensitivity analysis to determine the range of demand probabilities for which each of decision alternatives has the largest expected value. Please see the word file for all the calculations, explanations, and calculations.

View More Related Solutions