A company that manufactures baseball gloves is contemplating whether to increase its advertising budget by 3 million for next year. If the expanded advertising campaign is successful, the company expects sales to increase by 4.8 million next year. If the advertising campaign fails, the company expects sales to increase by only 900,000 next year. If the advertising budget is not increased, the company expects sales to increase by 450,000 . Identify the possible outcomes in this decision-making problem.
a. Two choices: (1) increase the budget and (2) do not increase the budget.
b. Four consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations.
c. Two choices: (1) campaign is successful and (2) campaign is not successful.
d. The increase in sales dollars next year.
Q. 2In 2011, the student body of a state university in Alabama consists of 30 freshmen, 25 sophomores, 27 juniors, and 18 seniors. A sample of 400 students taken from the 2012 student body showed that there are 138 freshmen, 88 sophomores, 94 juniors, and 80 seniors. Test with 5 significance level to determine whether the student body proportions have changed.
Q. 3Which of the following statements is false regarding the expected monetary value (EMV)?
a. To calculate the EMV, the probabilities of the states of nature must be already decided upon.
b. We choose the decision with the largest EMV.
c. In general, the expected monetary values represent possible payoffs.
d. None of these choices.
Q. 4Five types of apples are displayed side by side in several supermarkets in the city of Miami. It was noted that in one day, 180 customers purchased apples. Of these, 30 picked type A, 40 picked type B, 25 picked type C, 35 picked type D, and 50 picked type E. In Miami, can you conclude at the 5 significance level that there is a preferred type of apples?
Q. 5Which of the following is true?
a. The process of determining the EMV decision is called the rollback technique.
b. We choose the act that produces the smallest expected opportunity loss (EOL)
c. The EMV decision is always the same as the EOL decision.
d. All of these choices are true.
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