Paula sango sells premium strawberries local fruit stand

Large facility 550,000 110,000 –310,000

Medium-sized facility 300,000 129,000 –100,000

Q2. Peter Martin is going to help his brother who wants to open a food store. Peter initially believes that there is a 50–50 chance that his brother’s food store would be a success. Peter is considering doing a market research study. Based on historical data, there is a 0.8 probability that the marketing research will be favorable given a successful food store. Moreover, there is a 0.7 probability that the marketing research will be unfavorable given an unsuccessful food store.

(a) If the marketing research is favorable, what is Peter’s revised probability of a successful food store for his brother?

GOOD FAIR POOR INVESTMENT ECONOMY ECONOMY ECONOMY

Fund A $10,000 $2,000 - $5,000

(c) Suppose there is question about the return of Fund A in a good economy. It could be higher or lower than $10,000. What value for this would cause a person to be indifferent between Fund A and Fund B (i.e., the EMVs would be the same)?

Q4. Even though independent gasoline stations have been having a difficult time, Susan Solomon has been thinking about starting her own independent gasoline station. Susan’s problem is to decide how large her station should be. The annual returns will depend on both the size of her station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, Susan developed the following table:

Large 100,000 30,000 –40,000

Very large 300,000 25,000 –160,000

(d) What is the equally likely decision?

(e) What is the criterion of realism decision? Use an  value of 0.8.

HOSPITAL OF BEDs (100s) (MILLIONS)

1 215 77 57

6 210 155 93

7 140 53 45

12 42 29 15

13 110 28 21

44 67 1,844

44 50 1,998

35 90 2,404

32 99 2,611

25 124 2,922

22 97 2,434

16 153 4,380

16 139 4,036

Q8.  A company manufactures nails with an average length of 2 inches. The standard deviation is 1 / 4 of an inch.

a.       Assuming the distribution follows a normal distribution, what is the probabilty that any given nail is less than 2 inches

2. The variable cost for 1 pound of fruit is $3.50. How many pounds does Paula need to sell PER YEAR to break even at $5.00 per pound.

3. If he was to raise the price to $6.00, what is the break even point (how many pounds)?

Q11. Johnson wants to start a bakery, but don’t know what size of a bakery he should start. This is his estimate of profit for good, average and bad market conditions

1. Please draw a decision tree. Your decision tree needs to include all the numbers in the decision table.

Q15. Mysti Farris (see Problem 1-19) is considering raising the selling price of each cue to $50 instead of $40. If this is done while the costs remain the same, what would the new break-even point be? What would the total revenue be at this break-even point?

Q16. What is the meaning of mutually exclusive events? What is meant by collectively exhaustive? Give an example of each.

(b) exactly 4

(c) exactly 3