XYZ Is a Paint Product Manufacturer,and One of the Plants $\quad$

question 37

Multiple Choice

XYZ is a paint product manufacturer,and one of the plants is experiencing a substantial increase in demand.The future demand for the products could be low,medium,or high,with probabilities estimated to be 25%,50%,and 30%,respectively.The company wants to determine the financial impact associated with the three decision alternatives under the varying levels of demand.Given the following payoff matrix,compute the expected value of decisions with perfect information. $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Demand }$

$\begin{array} { | c | c | c | c | } \hline \text { Decision Altemative } & \text { Low(20\%) } & \text { Medium(50\%) } & \text { High (30\%) } \\\hline \begin{array} { c } \text { Subcontract additional } \\\text { capacity }\end{array} & \$ 7 \text { million } & \$ 40 \text { million } & \$ 70 \text { million } \\\hline \text { Build a new plant } & - \$ 55 \text { million } & \$ 25 \text { million } & \$ 100 \text { million } \\\hline\end{array}$

• A)$45.5 M
• B)$53M
• C)$12.4 M
• D)$70 M

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Definitions:

Unaided Recall Test

A market research technique that measures how well consumers can remember a brand or product without any prompts or cues.

Starch Test

A chemical method used to determine the presence of starch in various materials, typically involving an iodine solution that turns blue-black in the presence of starch.

Aided Recall Test

A marketing research technique where respondents are given specific cues or prompts to help them remember advertisements or brands.

Prompted Response Test

A research method where respondents are given cues or prompts to elicit specific responses, often used in memory or recognition studies.