A group of college students is considering starting a podcast about operation management topics. If they release new episodes twice a week, the podcast could earn a net profit of $200 per month in advertising, or $2400 for a year. If they produce fewer episodes at once a week then their net profit is closer to $100 per month, or $1200 for a year. If the market is unfavorable (i.e., no advertisers), they could lose up to $-300 for buying recording equipment. In the absence of marketing data, the best the students can guess is that the market is 50-50 chance that they will be able to attract listeners and thus solidify advertising payoffs. 1. Develop an opportunity loss table. 2. What is the minimax regret decision? 3. What is the expected opportunity loss?
A group of college students is considering starting a podcast about operation management topics. If they release new episodes twice a week, the podcast could earn a net profit of $200 per month in advertising, or $2400 for a year. If they produce fewer episodes at once a week then their net profit is closer to $100 per month, or $1200 for a year. If the market is unfavorable (i.e., no advertisers), they could lose up to $-300 for buying recording equipment.
In the absence of marketing data, the best the students can guess is that the market is 50-50 chance that they will be able to attract listeners and thus solidify advertising payoffs.
1. Develop an opportunity loss table.
2. What is the minimax regret decision?
3. What is the expected opportunity loss?
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