The Alternatives 1 and 2 in the Following Payoff Table

question 69

Multiple Choice

The alternatives 1 and 2 in the following payoff table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt.The level of demand affects the success of both strategies.The states of nature (S₁) represent the levels of demand for the company products.S₁,S₂ and S₃ characterize high,medium and low demand with probabilities of .3,.6 and .1 respectively.The payoff values are in thousands of dollars. The management believes that the weather conditions significantly affect the level of demand.48 monthly sales reports are randomly selected.These monthly sales reports showed 15 months with high demand,28 months with medium demand,and 5 months with low demand.12 of the 15 months with high demand had favorable weather conditions.14 of the 28 months with medium demand had favorable weather conditions.Only 1 of the 5 months with low demand had favorable weather conditions.The management believes that the weather conditions significantly impact the level of demand and the estimated probabilities of poor weather conditions given different levels of demand is presented below. What is the probability of high demand given that the weather conditions are poor?

• A).06
• B).44
• C).1364
• D).12
• E).1818

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Definitions:

Correlation Coefficient

An indicator that measures the extent of simultaneous variation in two or more variables.

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A device that emits a loud noise or other form of alert in response to smoke, fire, or other emergencies to warn individuals of potential danger.

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A mistake in memory where the source of a memory is mistakenly assigned to the incorrect time, location, or individual.

Familiarity

Familiarity is the state of recognizing something or someone due to previous encounters or knowledge, which can affect perceptions and interactions.