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Assignments For Chapters 3 and 4

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Titin Valentina Tobing
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13 views

Assignments For Chapters 3 and 4

Uploaded by

Titin Valentina Tobing
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Assignments for Chapters 3 and 4

Chapter 3

Problem 3.1
Hotmatua is thinking about producing a new type of electric razor for men. If the market
were favorable, he would get a return of $100,000, but if the market for this new type of
razor were unfavorable, he would lose $60,000. Since Satria is a good friend of Hotmatua,
Hotmatua is considering the possibility of using Satria Marketing Research to gather
additional information about the market for the razor. Satria has suggested that Hotmatua
either use a survey or a pilot study to test the market. The survey would be a sophisticated
questionnaire administered to a test market. It will cost $5,000. Another alternative is to run
a pilot study. This would involve producing a limited number of the new razors and trying to
sell them in two cities that are typical of American cities. The pilot study is more accurate
but is also more expensive. It will cost $20,000. Satria has suggested that it would be a good
idea for Hotmatua to conduct either the survey or the pilot before Hotmatua makes the
decision concerning whether or not to produce the new razor. But Hotmatua is not sure if
the value of the survey or the pilot is worth the cost.
Hotmatua estimates that the probability of a succesful market without performing a survey
or pilot study is 0.5. Furthermore, the probabilitty of a favorable survey results given a
favorable market for razors is 0.7, and the probability of a favorable survey result given an
unsuccessful market for razors is 0.2. In addition, the probability of an unfavorable pilot
study given an unfavorable market is 0.9, and the probability of an unsuccessful pilot study
result given a favorable market for razors is 0.2.
a) Draw the decision tree for this problem without the probability values
b) Compute the revised probabilities needed to complete the decision, and place these
values in the decision tree
c) What is the best decision for Hotmatua? Use expected monetary value as the decision
criterion
d) Hotmatua has been able to estimate his utility for a number of different values. He
would like to use these utility values in making the decision in Problem 3.1. The utility
values are: U(-$80,000)=0, U(-$65,000)=0.5, U(-$60,000)=0.55, U(-$20,000)=0.7, U(-
$5,000)=0.8, U($0)=0.81, U($80,000)=0.9,U($95,000)=0.95, and U($100,000)=1. Resolve
Problem 3.1 using utility values. Is Hotmatua a risk avoider?

Chapter 4

Problem 4.1
Jokrisat Storage Technologies produces refrigeration units for food producers and retail
food establishments. The overall average temperature that these units maintain is 46
℉ ahrenheit . The average range is 2℉ . Samples of six are taken to monitor the process.
Determine the upper and lower control chart limits for averages and ranges for these
refrigeration units

Problem 4.2
Sampling four pieces of precision–cut wire (to be used in computer assembly) every hour for
the past 24 hours has produced the following results:
Hour X R Hour X R
1 3.25” 0.71” 13 3.11” 0.85”
2 3.10 1.18 14 2.83 1.31
3 3.22 1.43 15 3.12 1.06
4 3.39 1.26 16 2.84 0.50
5 3.07 1.17 17 2.86 1.43
6 2.86 0.32 18 2.74 1.29
7 3.05 0.53 19 3.41 1.61
8 2.65 1.13 20 2.89 1.09
9 3.02 0.71 21 2.65 1.08
10 2.85 1.33 22 3.28 0.46
11 2.83 1.17 23 2.94 1.58
12 2.97 0.40 24 2.64 0.97

Develop appropriate control limits and determine whether there is any cause for concern in
the cutting process.

Have a great time doing it

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