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Problem based on decision tree.
A manufacturer must decide whether to extend credit to a retailer who would like to open an account with the firm. Past experience with new accounts indicates that 45% are high-risk customers, 35% are moderate-risk customers, and 20% re low-risk customers. If credit is extended, the manufacturer can expect to lose $60,000 with a high-risk customer, make $50,000 with a moderate-risk customer, and make $100,000 with a low-risk customer. If the manufacturer decides not ot extend credit to a customer, the manufacturer neither make nor loses any money. Prior to making a credit extension decision, the manufacturer can obtain a credit rating agency concedes that its rating procedure is not completely reliable. In particular, the credit rating procedure will rate a low-risk customer as a moderate-risk customer with probability 010 and as ahigh-risk customer with probability 0.05. Furthermore, the given rating procedure will rate a moderate-risk customer as a low-risk customer with probability 0.06 and as a high-risk customer with probability 0.07. Finally, the rating procedure will rate a high-risk customer as a low-risk customer with probability 0.01 and as a moderate-risk customer with probability 0.05
Find the strategy that maximizes the manufacturer's expected net earnings.
Should the manufacturer routinely obtain credit rating reports on those retailers who seek credit approval? Why or why not?
Suppose a research firm conducted a study to determine the average amount of money steady smokers spend on cigarettes during a week.
Assume 85% of passengers show up, 15% will not. Airline booked 11 people for 10 seats.
Before the rush began for Christmas shopping, a department store had noted that the percentage of its customers who use the store's credit card, the percentage of those who use a major credit card, and the percentage of those who pay cash are the ..
Which of the following would be a reason to choose a Moving Average Forecast model instead of a Naïve Model to forecast a series of data into the future?
What proportion of the scores in a normal distribution are higher than a T-score of 70, what Z-score has 90% of the scores below it and what deviation IQ score ranges would include 90% of the population
The data are stored in file Xm13-03. Can we infer that finance majors obtain higher salary offers than do marketing majors among MBAs?. What"s happening here?
a) Explain why it would be hard to take a Simple Random Sample? b) Describe how to take a cluster sample of chocolate chip cookies.
A new process has been implemented and it is stated to have an average cycle time of 120 seconds. A sample of 50 cycles yielded an average cycle time of 115 seconds, with a standard deviation of 2 seconds.
Use this information to find the probability that an HRO officer selected from the group surveyed had problems with either employee absenteeism or employee turnover.
Overtime happens after eight hours of work on given day. Determine the probability that letter carrier works overtime on any given day?
Assume gasoline prices for a region are normally distributed. Do the data you obtained provide enough evidence to reject the claim?
Asian Americans and Pacific Islanders belong to a single Asian American culture, what do you say to them to convince them both statements are misconceptions?
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