Note: It is recommended that you save your response as you complete each questio

Question

Note: It is recommended that you save your response as you complete each question. Information Dalton Publishing needs to decide whether or not to publish a new business statistics textbook. The demands can vary as follows, and the payoff for each demand level is shown in the table below: Very strong Fair Poor $100,000 $5000 -$60,000 0.2 0.4 0.4 Before making a final decision, the editor can learn more about the text's potential for success through survey. The performance of similar surveys in the past are provided in the table below in the form of probabilities. em ctual demand Very strong Fair Poor Survey indication of the demand Neutral 0.25 0.57 0.24 Positive 0.70 0.08 0.09 Negative 0.05 0.35 0. 67 Question 1 (1 point) What is the strategy that maximizes the publisher's expected payoff?

Explanation / Answer

So, if they properly implemented the advertising and promotions before the survey then their business is growing well and they can get good payoff.

2. This is really a good question. A business person needs to calculate in before conducting the survey. How many books are ready to supply to meet the expectations of demand.

Let’s see a small example—

Books are available 300 and demand is 270

Each book cost is $10

In before he brings the books into the market then he/she need to increase the demand.

So, he needs to conduct a survey of 20 or 25% of his profit in books

So the profit in each book is 6%

So, the profit percentage multiply with total books produced then =6%*300 then his total profit will be $18

So, he needs to bear the survey expenditure will be 25% on $18 = $4.5

If he/she wants to conduct a new survey then they need to bear the $4.5.

3. We have discussed the expenditure for their new survey in the second point that is $4.5. If the business person wants a perfect survey to get the perfect information then the keen survey needs to implement in order to increase the payoff.

So, the percentage of 25% to increase by 30%.

So, if he/she get the profit of $18 for 300 books. If the business person required perfect information then he/she bear the amount or willing to pay the amount is =30% on $18 = $5.4

So, the business person needs willing to pay $5.4.

4. To based on the second question, I got the answer of rounded of amount $4.5. So, it is the value of $4.5000.

The value is $4.5000.

5. As per the given in the question, the new survey cost is $3,000.

Let’s the survey cost $3,000 equal to 25$ of profit on sold of books.

If the total profit calculated based on the survey value then the business person got $12,000.

In overall the pay off will be calculated on $12,000 profit then = 6/10*12000 =$20,000.

So, the expected payoff will get $20,000.

This payoff amount calculated as per the values are taken based on the second and third question.

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