Super Cola is also considering the introduction of a root beer drink.The company feels that the probability that the product will be a success is .6.The payoff table is as follows:
The company has a choice of two research firms to obtain information for this product.Stanton Marketing has market indicators,I1 and I2 for which P(I1SYMBOL 189 \f "Symbol"s1)= .7 and P(I1SYMBOL 189 \f "Symbol"s2)= .4.New World Marketing has indicators J1 and J2 for which P(J1SYMBOL 189 \f "Symbol"s1)= .6 and P(J1SYMBOL 189 \f "Symbol"s2)= .3.
a.What is the optimal decision if neither firm is used? Over what probability of success range is this decision optimal?
b.What is the EVPI?
c.Find the EVSIs and efficiencies for Stanton and New World.
d.If both firms charge $5,000,which firm should be hired?
e.If Stanton charges $10,000 and New World charges $4,000,which firm should Super Cola hire? Why?
Definitions:
Bias
A systematic error or deviation from the truth in results or inferences, which can occur in the collection, analysis, interpretation, or review of data.
Resamples
The process of drawing repeated samples from a set of data with the aim of estimating a population parameter.
Bootstrap Estimate
A method of statistical inference where sampling distributions of statistics are estimated by sampling with replacement from the original dataset.
Trimmed Mean
A method of averaging that involves removing a specified percentage of the smallest and largest values before calculating the mean.
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