Super Cola Is Considering the Introduction of a Root Beer

question 6

Essay

Super Cola is considering the introduction of a root beer drink. The company feels that the probability of the new drink being successful is .6. The payoff table is as follows. Super Cola has a choice of two research firms to obtain information for this new product. Stanton Marketing has market indicators I₁ and I₂ for which P(I₁|S₁) = .7 and P(I₁|S₂) = .4. New World Marketing has indicators J₁ and J₂ for which P(J₁|S₁) = .6 and P(J₁|S₂) = .3. (Be sure to compute probabilities to the third decimal place.)
a.What is the optimal decision if neither research firm is used?
b.Compute the expected value of perfect information (EVPI).
c.Find the EVSIs for Stanton and New World.
d.If both research firms charge $5,000, which firm should be hired?
e.If Stanton charges $10,000 and New World charges $5,000, which firm should Super Cola hire?

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Definitions:

Future Generations

Groups of people who will be born and live in future periods, whose interests are considered in long-term planning and sustainability efforts.

Contextual Influences

Factors originating from the surrounding environment that affect individuals' perceptions, behaviors, and decisions, including cultural, social, and physical context.

Decision-making Process

The decision-making process involves identifying and choosing alternatives based on the values and preferences of the decision-maker, a critical aspect of planning and problem-solving in various contexts.

Attitude

A relatively enduring organization of beliefs, feelings, and behavioral tendencies toward socially significant objects, groups, events, or symbols, typically expressed through general liking or disliking of the attitude target.