Letz Products has two decisions to make, with the second decision dependent on the outcome of the first. The company intends to build a new plant. Letz has the option of conducting its own marketing research survey for which the results will either be positive or negative. The information from this survey could help it decide whether to build a large plant, to build a small plant, or not to build at all. Letz recognizes that although such a survey will not provide it with perfect information, it may be extremely helpful. 1st decision point $49,200 Survey 2nd decision point Sur. Res. Pos. (45) Sur. Res. Neg. (.55) No survey $106,400 $2,400 $40,000 Large plant Small $63,600 3 plant No plant $106,000 No plant Large plant Small $2,400 plant 5 Large plant Small plant No plant -$87,400 (4) $10,000 6 $40,000 Fav. Mkt (0.78) Unfav. Mkt (0.22) Fav. Mkt (0.78) Unfav. Mkt (0.22) Fav. Mkt (0.27) Unfav. Mkt (0.73) Fav. Mkt (0.27) Unfav. Mkt (0.73) Fav. Mkt (0.5) Unfav. Mkt (0.5) Fav. Mkt (0.5) Unfav. Mkt (0.5) $190,000 -$190,000 $90,000 $30,000 $10.000 $190,000 -$190,000 $90,000 $30,000 $10,000 $200,000 -$180,000 $100,000 $20,000 $0

Letz Products has two decisions to make, with the second decision dependent on the outcome of the first. The company intends to build a new plant. Letz has the option of conducting its own marketing research survey for which the results will either be positive or negative. The information from this survey could help it decide whether to build a large plant, to build a small plant, or not to build at all. Letz recognizes that although such a survey will not provide it with perfect information, it may be extremely helpful. 1st decision point $49,200 Survey 2nd decision point Sur. Res. Pos. (45) Sur. Res. Neg. (.55) No survey $106,400 $2,400 $40,000 Large plant Small $63,600 3 plant No plant $106,000 No plant Large plant Small $2,400 plant 5 Large plant Small plant No plant -$87,400 (4) $10,000 6 $40,000 Fav. Mkt (0.78) Unfav. Mkt (0.22) Fav. Mkt (0.78) Unfav. Mkt (0.22) Fav. Mkt (0.27) Unfav. Mkt (0.73) Fav. Mkt (0.27) Unfav. Mkt (0.73) Fav. Mkt (0.5) Unfav. Mkt (0.5) Fav. Mkt (0.5) Unfav. Mkt (0.5) $190,000 -$190,000 $90,000 $30,000 $10.000 $190,000 -$190,000 $90,000 $30,000 $10,000 $200,000 -$180,000 $100,000 $20,000 $0

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter6: Target Markets: Segmentation And Evaluation

Section: Chapter Questions

Problem 17DRQ: Under what conditions might a firm use multiple forecasting methods?

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Letz Products has two decisions to make, with the second decision dependent on the outcome of the first. The company intends to build a new plant. Letz has the option of conducting its own marketing research survey for which the results will either be positive or negative. The information from this survey could help it decide whether to build a large plant, to build a small plant, or not to build at all. Letz recognizes that although such a survey will not provide it with perfect information, it may be extremely helpful. Using figure 1 – explain to your client (Letz) what the above decision tree shows. You are required to show all working.
Letz Products has two decisions to make, with the second decision dependent on the outcomeof the first. The company intends to build a new plant. Letz has the option of conducting itsown marketing research survey for which the results will either be positive or negative. Theinformation from this survey could help it decide whether to build a large plant, to build a smallplant, or not to build at all. Letz recognizes that although such a survey will not provide it withperfect information, it may be extremely helpful. Using the image explain to your client (Letz) what the above decision tree shows. You arerequired to show all working.
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