Question 388030: International Pictures is trying to decide how to distribute its new movie ‘Claws’. ‘Claws’ is the story of an animal husbandry experiment at the University of Southern Queensland that goes astray, with tragic results. An effort to breed meatier chickens somehow produces an intelligent, 200 kilogram chicken that escapes from the lab and terrorises the campus. In a surprise ending the chicken is befriended by coach Tim Galvano, who teaches it how to play Rugby and help his team win State, National and World Championships. Because of the movie’s controversial nature, it has the potential to be either a smash hit, a modest success, or a total bomb. International is trying to decide whether to release the picture for general distribution initially or to start out with a ‘limited first-run release’ at a few selected theatres, followed by general distribution after 3 months. The company has estimated the following probabilities and conditional profits for ‘Claws’:
PROFITS (Millions of $)
Level of success Probability Limited release General distribution
Smash .3 22 12
Modest .4 9 8
Bomb .3 –10 –2
International can run sneak previews of ‘Claws’ to get a better idea of the movies’ ultimate level of success. Preview audiences rate movies as either good or excellent. On the basis of past experiences, it was found that 90% of all smash successes were rated excellent (and 10% rated good), 75% of all modest successes were rated excellent (25% rated good) and 40% of all bombs were rated excellent (60% rated good). The cost of running sneak previews is not cheap. Currently, this stands at $1m.
QUESTION 29
What is the opportunity loss for a Limited release for a Bomb level of success?
Answer should be to whole numbers only. You do not need to put any units in your answer.
QUESTION 30
What would the optimal action be for International before running the sneak preview?
Run a limited release with an expected payoff of $7.20m
Run a limited release with an expected payoff of $6.20m
Run a general distribution with an expected payoff of $7.20m
Run a general distribution with an expected payoff of $6.20m
QUESTION 31
What is the maximum amount of money that International would be prepared to pay for an absolutely reliable forecast of the movies’ level of success?
$9.6m
$7.2m
$6.2m
$2.4m
QUESTION 32
What would be the joint probability for a ‘smash success’ and good preview given that in the past, it was found that 10% of all smash successes were rated good?
Answer should be to two decimal places e.g. 0.12, 0.23, etc.
QUESTION 33
What is the posterior probability of a bomb given the sneak preview indicates good?
Answer should be to four decimal places e.g. 0.1234, 0.2345 etc.
Please do NOT include any units in your answer.
QUESTION 34
What is the maximum amount that should be paid for the sneak preview (i.e. what would be the expected value of sample information (EVSI))? Select the closest correct answer.
Use four decimal places in your calculations but you can round off the final answer to 2 decimal places.)
$1.04 million
$2.58 million
$7.2 million
$8.24 million
Answer by solver91311(24713)   (Show Source):
You can put this solution on YOUR website!
This falls into the category of just dumping your entire homework assignment into one post. Not gonna happen, pal. Go back and read the instructions for posting. Especially the one that says "One question per post" Read them several times if you have to in order to achieive full understanding.
John
My calculator said it, I believe it, that settles it
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