. Westward Magazine Publishers are thinking of launching a new fashion magazine for women in the under-25 age group. Their original plans were to launch in April of next year, but information has been received that a rival publisher is planning a similar magazine. Westward now have to decide whether to bring their launch forward to January of next year, though this would cost an additional $500,000. If the launch is brought forward it is estimated that the chances of launching before the rival are about 70%. However, if the launch is not brought forward it is thought that there is only a 40% chance of launching before the rival. For simplicity, the management of Westward have assumed that the circulation of the magazine throughout its life will be either high or low. If Westward launch before the rival, it is thought that there is a 65% chance of a high circulation. However, if the rival launches first, this probability is estimated to be only 50%. If the rival does launch first then Westward could try to boost sales by increasing their level of advertising. This would cost an extra $200 000, but it is thought that it would increase the probability of a high circulation to 80%. This increased advertising expenditure would not be considered if Westward’s magazine was launched first. Westward’s accountants have estimated that a high circulation would generate a gross profit over the magazine’s lifetime of $6 million. A low circulation would bring a gross profit of about $2 million. It is important to note, however, that these gross profits do not take into account additional expenditure caused by bringing the launch forward or by increased advertising. a. Assuming that Westward’s objective is to maximize expected profit, determine the policy that they should choose. (For simplicity, you should ignore Westward’s preference for money over time: for example, the fact that they would prefer to receive a given cash inflow now rather than in the future.) b. In reality, Westward have little knowledge of the progress which has been made by the rival. This means that the probabilities given above for launching before the rival (if the launch is, or is not, brought forward) are very rough estimates. How sensitive is the policy you identified in (b) to changes in these probabilities?2. ABC Chemicals are planning to start manufacturing a new pharmaceutical product. Initially, they must decide whether to go for large-scale or small-scale production. Having made this decision, the profits that they make will also depend on (i) the state of the economy over BUS 606 Fall 2021 the next 2 years; (ii) whether or not a rival manufacturer launches a similar product; and (iii) the amount which ABC decides to spend on advertising the product (this decision will itself be influenced by the scale of production which ABC opt for, whether a rival product is launched and the state of the economy). a. Use an influence diagram to represent the above decision problem, stating any assumptions you have made. b. Use your influence diagram to derive the outline of a decision tree which could be used to represent ABC’s problem
Payoff (Profit $m) | ||||||||||||||||
EMV | ||||||||||||||||
1 | ||||||||||||||||
EMV | ||||||||||||||||
EMV | ||||||||||||||||
EMV | ||||||||||||||||
EMV | ||||||||||||||||
EMV | ||||||||||||||||
EMV | 1 | |||||||||||||||
EMV | ||||||||||||||||
EMV | ||||||||||||||||
EMV | ||||||||||||||||
EMV | ||||||||||||||||
EMV | ||||||||||||||||
Part a) which policy should be selected? | ||||||||||||||||
Part b) Sensitivity Analysis for the probability of launching “Before the rival” in the “Bring Launch Forward” policy | Part b) Sensitivity Analysis for the probability of launching “Before the rival” in the ” Don’t Bring Launch Forward” policy | |||||||||||||||
Probability | Bring Launch Forward | Don’t Bring Launch Forward | Probability | Bring Launch Forward | Don’t Bring Launch Forward | |||||||||||
$0.00 | $0.00 | $0.00 | $0.00 | |||||||||||||
0.00 | 0.00 | |||||||||||||||
0.10 | 0.10 | |||||||||||||||
0.20 | 0.20 | |||||||||||||||
0.30 | 0.30 | |||||||||||||||
0.40 | 0.40 | |||||||||||||||
0.50 | 0.50 | |||||||||||||||
0.60 | 0.60 | |||||||||||||||
0.70 | 0.70 | |||||||||||||||
0.80 | 0.80 | |||||||||||||||
0.90 | 0.90 | |||||||||||||||
1.00 | 1.00 | |||||||||||||||
Part b) Plot of Sensitivity Analysis | Part b) Plot of Sensitivity Analysis | |||||||||||||||
Part b: Interpretation of sensitivity analysis | Part b: Interpretation of sensitivity analysis |
Increasing advertising
Don’t increase ads.
Bring Launch Forward
After the rival
Before the rival
High circ
Low circ
High circ
High circ
Low circ
Low circ
Increasing advertising
Don’t increase ads.
High circ
High circ
Low circ
After the rival
Before the rival
High circ
Low circ
Don’t Bring Launch Forward
Don’t Launch
Low circ
Why Work with Us
Top Quality and Well-Researched Papers
Our writers have been trained on how to handle papers placed by our clients. The writer must read and understand before embarking on writing the papers. In case of any issue that needs clarification, writers are encouraged to ask the client or support.
Professional and Experienced Academic Writers
Our team comprises of the best writers and editors. We do thorough vetting during recruitment to make sure that our writers have the knowledge and experience we aspire in the team.
Free Unlimited Revisions
Our aim is to give the client the best outcome. If for some reason you are not satisfied with the wok done, you can ask the paper to be revised or rewritten. This will be done to your satisfaction with no extra charges.
Prompt Delivery and 100% Money-Back-Guarantee
We have writers who work round the clock. This helps in making sure that all our clients’ papers are delivered on time. If we have issues with the deadline, we will ask for extension. If its not possible, the money is fully refunded.
Original & Confidential
Our clients’ confidentiality is highly respected. We can never disclose our clients’ details to third parties. In the same regard, we strive to give our clients 100% original papers. We do not tolerate plagiarism from our writers.
24/7 Customer Support
Clients can reach us any time of the day, and any day of the week. There is a live chat, email or phone numbers to help in ease of communication.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Our Services
You should never be worried about your papers even in the middle of the night. Our team will work round the clock to deliver.
Essays
We have an able team that can deliver your work in the shortest time possible. The academic level or the type of work should never be a hindrance. Our highly competent support team is always around (24/7) to give you any assistance you may need.
Admissions
Admission Essays & Business Writing Help
Do you need to be admitted in your dream institution but find it challenging to write an admission essay? Our team is in a position to write the best letter that will guarantee you an admission. We do as well write the best business proposals and reports.
Reviews
Editing Support
Writing can be fun and enjoyable when everything has been done right. Writing is not just enough without proper editing and proofreading. We have a team of editors that ensure everything falls in place, whether its issues to do with grammar or referencing styles.
Reviews
Revision Support
Once the paper has been done and submitted, that is not the end of it. You can always ask for amendment or improvement if you feel something has not been done right. Our team of writers and editors will gladly assist you to your satisfaction. Revision is free of charge.