QAT1 Task 5
SUBDOMAIN 309.3 - QUANTITATIVE ANALYSIS
Competency 309.3.3: Expected Value Decision Analysis - The graduate uses expected value concepts as decision-making tools.
Objective 309.3.3-04: Determine for a given decision tree which decision branch has the most favorable total expected value.
A company is considering alternatives for improving profits: develop new products or consolidate existing products. If the company decides to develop new products, it can either develop several products rapidly or take time to develop a few products more thoroughly. If the company chooses to consolidate existing products, it can either strengthen the products to improve profits or simply reap whatever gains are attainable without investing more time and money in the products.
The “Decision Tree Chart” attachment shows the predicted gains from each decision alternative described above. Gains depend on how the market reacts to the action taken by the company. The probability of each market reaction is shown on the decision tree.
Develop a response to the attached decision tree chart in which you do the following:
A. Calculate the expected value for each of the four decision branches, showing all work or reasoning.
B. Determine the decision alternative that has the most favorable total expected value.
1. Explain how you reached your determination in part B, comparing the results from the 4 decisions branches from part A.
C. When you use sources, include all in-text citations and references in APA format.
Note: To reduce unnecessary matches select ignore “small matches <20 words” and “bibliography”.
Note: For definitions of terms commonly used in the rubric, see the attached Rubric Terms.
A++ PERFECTLY DONE
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|xxxx xxxxxxx investing|
|The xxxx xxxxxx is xx develop xxx product rapidly xx xx has the most favorable expected xxxxxx|
|xx all alternatives xxxxx xxx x possibilities and xxxx are xxxxx moderate xxx poor xxx the probability xxx xxxx possible xxxxxxxxx is xxxxxx|
|The expected xxxx xxx xxxx xxxxxxxx situation has xxxx xxxxxxxxxx by xxx xxxxxxxxxxxx then xxx result of xxxx is added xx arrive xx the|
|expected value xx each alternative. The xxxxxxxx xx based xx expected xxxxx not xx xxx xxxxx xx highest amount of xxxxxxxx xxxxx if xxxx|
|xxxxx xxxx been considered then the xxxxx xxxxxxxxxxx xx developing thoroughly would have xxxx selected xx xx has xxx highest|
|xxxxxx of xxxx xx $450000, xxx the xxxxxxxxxxx xx on xxxxx side xxxxxxxxx xxx contribution towards xxxxxxxx value is only 450000*.3 x 135000,|
|xxxxx for xxxxxxxxxx rapidly xxx lower xxxx xx good xxxxxxxxx of xxxxxxx xxx xxxx xxxxxx probability therefore its contribution is 400000*0.4 x 160000|
|xxxxxxx expected value of xxxx xxxxxxxxxxxx|
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