Dollar Department Stores Has Just Acquired the Chain of Wenthrope

question 56

Essay

Dollar Department Stores has just acquired the chain of Wenthrope and Sons Custom Jewelers.Dollar has received an offer from Harris Diamonds to purchase the Wenthrope store on Grove Street for $120,000.Dollar has determined probability estimates of the store's future profitability,based on economic outcomes,as: P($80,000)= 0.2,P($100,000)= 0.3,P($120,000)= 0.1,and P($140,000)= 0.4.
a.Should Dollar sell the store on Grove Street?
b.What is the EVPI?
c.Dollar can have an economic forecast performed,costing $10,000,that produces indicators I₁ and I₂,for which P(I₁ | 80,000)= 0.1; P(I₁ | 100,000)= 0.2; P(I₁ | 120,000)= 0.6; P(I₁ | 140,000)= 0.3.Should Dollar purchase the forecast?
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Definitions:

Groups Examined

Refers to the specific collections of individuals, objects, or data points that are being studied or analyzed in research.

First Grouping Factor

The primary variable used to categorize or group data points in an analysis or experiment.

4 × 3 Factorial Design

An experimental design method that involves two independent variables, where one has 4 levels and the other has 3 levels, leading to 12 different experimental conditions.

Levels

Distinct values or categories of a categorical variable.