Super Cola Company
The Super Cola Company must decide whether or not to introduce a new diet soft drink. Management feels that if it does introduce the diet soda it will yield a profit of $1 million if sales are around 100 million, a profit of $200,000 if sales are around 50 million, or it will lose $2 million if sales are only around 1 million bottles. If Super Cola does not market the new diet soda, it will suffer a loss of $400,000.
a.
Construct a payoff table for this problem.
b. Construct a regret table for this problem.
d. An internal marketing research study has found P(100 million in sales) = 1/3; P(50 million in sales) = 1/2;P(1 million in sales) = 1/6. Should Super Cola introduce the new diet soda?
E. Based on opportunity losses, which strategy is best for super cola?
F. What is the EVPI (expected value of information)? How do you find this?
G. A consulting firm can perform a more thorough study for $275,000. Should management have this study performed?
The Super Cola Company must decide whether or not to introduce a new diet soft drink. Management feels that if it does introduce the diet soda it will yield a profit of $1 million if sales are around 100 million, a profit of $200,000 if sales are around 50 million, or it will lose $2 million if sales are only around 1 million bottles. If Super Cola does not market the new diet soda, it will suffer a loss of $400,000.
a.
Construct a payoff table for this problem.
b. Construct a regret table for this problem.
d. An internal marketing research study has found P(100 million in sales) = 1/3; P(50 million in sales) = 1/2;P(1 million in sales) = 1/6. Should Super Cola introduce the new diet soda?
E. Based on opportunity losses, which strategy is best for super cola?
F. What is the EVPI (expected value of information)? How do you find this?
G. A consulting firm can perform a more thorough study for $275,000. Should management have this study performed?
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