The Super Cola Company must decide whether or not to introduce a new diet soft d
ID: 361348 • Letter: T
Question
The Super Cola Company must decide whether or not to introduce a new diet soft drink. Management feels that if it does introduce the diet soda it will yield a profit of 1.25 million if sales are 100 million, a profit of 300,000 if sales are 50 million, or it will lose 1.75 million if sales are only 1 million bottles. If super Cola does not market the new diet soda it will suffer a loss of 450,000. TO be done in excel a. Construct a payoff table for this problem b. construct a regret (opportunity loss) table for this problem. c. An internal marketing research study has found P (100 million in sales)=1/3; P(50 million in sales)=1/2; p(1 million in sales)=1/6. Should super cola introduce the new diet soda based on expected profits? d. Based on expected opportunity losses, which strategy is best for super cola? e. What is the EVPI (expected value of perfect info) f. A consulting firm can perform a more thorough study for 300,000. Should management have this study performed. g if the conditional probablities are .75 .15 and .10 for the three states, what would b the expected value of sample information. (EVSI) Formulas in excel!
Explanation / Answer
A.
B.
C.
D.
E.
F.
No, as the margin of difference is 141,666.67, so 300,000 spent on the profit will cause loss.
Hence not advisable.
G.
Profits Prob Sales No ads Ads 0.333 100000000 -450000 1250000 0.500 50000000 -450000 300000 0.167 1000000 -450000 -1750000Related Questions
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