Exhibit 14.6 The Following Questions Use the Information Below

question 40

Multiple Choice

Exhibit 14.6
The following questions use the information below.
A company is planning a plant expansion. They can build a large or small plant. The payoffs for the plant depend on the level of consumer demand for the company's products. The company believes that there is an 69% chance that demand for their products will be high and a 31% chance that it will be low. The company can pay a market research firm to survey consumer attitudes towards the company's products. There is a 63% chance that the customers will like the products and a 37% chance that they won't. The payoff matrix and costs of the two plants are listed below. The company believes that if the survey is favorable there is a 92% chance that demand will be high for the products. If the survey is unfavorable there is only a 30% chance that the demand will be high. The following decision tree has been built for this problem. The company has computed that the expected monetary value of the best decision without sample information is 154.35 million. The company has developed the following conditional probability table for their decision problem.
-Which of the following summarizes the final outcome for each decision alternative?

• A) payoff matrix
• B) outcome matrix
• C) yield matrix
• D) performance matrix

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Definitions:

Intangible Expenses

Costs associated with non-physical assets or activities, such as branding, intellectual property, or research and development.

Clerical Expenses

Costs associated with administrative tasks and office support services.

Formative Evaluations

Assessments conducted during the development of a project, program, or curriculum to provide feedback and guide improvements.

Summative Evaluations

Assessments conducted at the end of a period of learning to measure the extent of learner's achievement or success.