Problem 1- TINGLE TECH and Problem 2 – MPT

| September 28, 2018

PROBLEM 1
TINGLE TECH has
developed a new chip code named TICKLER which
they think will have a life cycle of two years be foreit will be replaced by a faster chip.TINGLE
TECHthinksthatinthefirstyeartheywillselleitheralowof300,000TICKLER CHIPS orahighof500,000
TICKLER CHIPS inthesecondyear,competing
productsareexpectedto reducetheTICKLER CHIPSsalestoalowof200,000orahighof400,000
units.TINGLE TECH management
believes that there is a 30% chance that sales in both years will be high, but
thereis also a 20% risk that sales will be low in both years. They are
optimistic that there is a good70% chance of high sales in the firstyear.
a.
WhatistheprobabilitythatTICKLER CHIPSsaleswillbehighinthesecondyear?Summarizeyour calculations
in a joint probability table and on a Venn diagram.
b.
Ifthefirstyearsalesturnouttobehigh,whatarethechancesthattheywillbehighinthe second
year also? Show your results on a probability tree.
c.
Determine forecasts (expected values) of
sales in each of the two years.
d.
Compute the probability distribution of
total sales during its two-yearlifecycle.
e.
Determinetheforecast(expected
value)ofthetotalsalesoveritslifetimetwoways:(i) from
(b) and (ii) from (c).

PROBLEM 2
(To Buy or Not to Buy?) CEO of MPT is thinking
of purchasing SWL Inc. but is not sure if the company will be a profitable purchase for MPT.
CEO thinks there is a 60%chancethat SWL
willbeprofitable,inwhich
case CEOwillreceive
a$400mbonusforleading
the buyout.Ifhoweverthepurchaseisnotprofitable,the CEO willlose$200m
from hiscurrent retirement
package.Ofcourse,
ifhedecidesnottopurchasethecompany,hewillhaveno additional profits or losses, and he can
retire with the currentpackage.

a.
Whatshould
the CEO do?Summarizeyourresultsinapayoff
tableandonadecision
tree.

b.
Suppose,beforemakingthedecision,the CEO canconsultanindustry
analyst,Ms.Krystal
Ball, who can evaluate and
classify the company as either a “good buy” or a “bad buy”. Ms.Ball’s past
record shows that she has correctly identified 80% of profitable companies as
goodbuys, but also incorrectly classified 30% of unprofitable companies as
good buys. Krystal Ballhas quoted $5 million fee for evaluating
profitability of SWL. Should the CEO hireher services?

Get a 30 % discount on an order above $ 100
Use the following coupon code:
RESEARCH
Order your essay today and save 30% with the discount code: RESEARCHOrder Now
Positive SSL