# Expected Value and Uncertainty

MANAGEMENT                                                                             NAME _________________

COURSE 3233

Don't use plagiarized sources. Get Your Custom Essay on
Expected Value and Uncertainty
Get a plagiarism free paperJust from \$13/Page

EXPECTED VALUE AND UNCERTANTY

Problem 1:  Expected Value

Determine whether you would decide, based on profitability, to go with the product cluster of Product A, Product B, and Product C or the product cluster of Product X, Product Y, and Product Z.

Product A is expecting revenues of \$800,000 and costs of \$300,000.

Product B is expecting revenues of \$600,000 and costs of \$150,000.

Product C is expecting revenues of \$700,000 and costs of \$305,000.

The probability of achieving these revenues and costs are 28% for Product A and 34% for Product C?

Product X is expecting revenues of \$700,000 and costs of \$300,000.

Product Y is expecting revenues of \$650,000 and costs of \$250,000.

Product Z is expecting revenues of \$800,000 and costs of \$425,000.

The probability of achieving these revenues and costs are 35% for Product X and 31% for Product Z?

Your goal is to maximize profits.  Which product cluster would you choose?

For any credit, you must show all your work.

Problem 2:  Uncertainty

Uncertainty is when the outcomes are not certain and you are unable to estimate probabilities, but you use your psychological orientation to make decision.  If you are optimistic you would make a “maximax” choice.  If you are generally a pessimist, you would make a “maximin” choice.  You also can make a choice that minimizes your maximum “regret” or make a minimax choice.

Use the following information and determine what would be your three choices based on the three psychological orientations (maximax, maximin, and minimax).

Show all work.

Payoff Table

 Response: R1 R2 R3 Strategy: S1 2232 2156 2199 S2 2021 1545 1402 S3 1598 1718 2209 S4 2157 2199 2233

 Response: R1 R2 R3 Strategy: S1 S2 S3 S4

 Response: R1 R2 R3 Strategy: S1 S2 S3 S4

 Response: R1 R2 R3 Strategy: S1 S2 S3 S4

 Response: R1 R2 R3 Strategy: S1 S2 S3 S4

Pages (550 words)
Approximate price: -

Plagiarism Free Papers

All our papers are original and written from scratch. We will email you a plagiarism report alongside your completed paper once done.

Free Revisions

All papers are submitted ahead of time. We do this to allow you time to point out any area you would need revision on, and help you for free.

Title-page

Bibliography

Originality & Security

At Homework Valley, we take confidentiality seriously and all your personal information is stored safely and do not share it with third parties for any reasons whatsoever. Our work is original and we send plagiarism reports alongside every paper.

Our agents are online 24/7. Feel free to contact us through email or talk to our live agents.

Try it now!

## Calculate the price of your order

We'll send you the first draft for approval by at
Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Our Services

We work around the clock to see best customer experience.

## Flexible Pricing

Our prices are pocket friendly and you can do partial payments. When that is not enough, we have a free enquiry service.