Bus 625 Week 6 – Discussion 1 Response
Guided Response: Your initial response should be a minimum of 300 words in length. Respond to at least two peers by Day 7. In your first response, critique one of your peers’ Part 1 scenarios. In your second response, critique a student’s Part 2 reply to the scenario that has not been critiqued by others, for each of the following:

· Missing or out of place sequences of actions. Justify your assessment.

· Determination of essential decisions and uncertainties. Justify your reasons.

· Determination of risk profile for each choice. Explain your assessment.

Below there are two of my classmate’s discussion that needs I need to response to their names are Ashley Thiberville and Robert Mcalexander
Robert Mcalexander
PART 2

Good morning everyone,

In order to find our expected profit for the next holiday season, we will need to implement some basic decision analysis techniques. There are three steps that will be very helpful to us in our current situation. The first step would be to gather up all the additional data that we requested in Part 1 of this assignment. From there we can do our best to look at the costs and benefits of the various choices we might make in the coming holiday season. For Toy 1 this will involve a great deal of judgement because it is a brand new toy on the market. But for Toy 2, we can use a great deal of existing data from the previous holiday season. A good way to do this would be make a payoff table or decision tree for each state of nature. This visualization will really help to make better decisions.

The next step would be to estimate the likelihood of each of our states of nature that we have established. For this next step, we would need to take a look at the expected value for each decision. For Toy 1&2 we would need to find the expected value with perfect information. “The expected value of a hypothetical strategy assuming that the states of nature are known.” (Sharpe 24-16) Once this is established we can put our results up against the expected value with without perfect information. However, once we find our results, we need to make sure that the probabilities we come up with are legitimate.

The final step would be looking at the costs and benefits of Toy 1 and Toy 2 when we are somewhat uncertain about the states of nature. Both products will have some uncertainty, however Toy 1 will have the most. We have a fair amount of data on Toy 2 because it was out in the market last holiday season. In this stage it would again be wise to make a decision tree and look at our expected values. Depending on how much risk we are willing to take, we will implement certain strategies. A Maximax strategy, will be the action that maximizes possible returns across all the different states of nature. Minimax strategy, will be the action that minimizes the maximum possible cost of every state of nature. Finally Minimin strategy, will be the action that minimizes the minimum possible cost across all the states of nature. Once a decision is established it would be wise to do a return to risk ratio. This would help give you a better idea of how your expected return and the relative risk involved may affect things.

Sharpe, N. D., De Veaux, R. D., & Velleman, P. F. (n.d.). Business Statistics, 4/e. Retrieved from https://platform.virdocs.com/r/s/0/doc/509177/sp/68046830/mi/291162249?cfi=%2F4%2F2%5BP700101598900000000000000000E2B3%5D%2F6%5BP700101598900000000000000000E2CB%5D%2F4%5BP700101598900000000000000000E2CD%5D%2F8%5BP700101598900000000000000000E2D2%5D%2F2%5BP700101598900000000000000000E2D3%5D%2C%2F1%3A0%2C%2F1

Ashley Thiberville
TuesdayMar 31 at 11:20am

Manage Discussion Entry

Part 1

Data analysis provides information that can be utilized in making business decisions. These analyses assign numerical figures to information, generally in monetary figures, to show the potential profit or loss based on business decisions (Sharp, De Veaux & Velleman, 2019). For Choice Toys Toy 1 would be new to the market and have little to no known competition, compared to Toy 2 that has previous sales data, but will encounter 2 competitors this holiday season. A poor decision on the part of the business executives could lead to significant costs to the company with little to no reward (Sharp et al, 2019).

Toy 1 could be successful with no competition, however, to create a sound decision analysis additional information is required. The probability of success, which will provide the expected value Toy 1 will be a key piece of information (Sharp et al, 2019). The projected number of units the company is projected to produce. Which will lead to the coefficient variation, or amount of money at risk, for the company (Sharp et al, 2019). Also, the suggested retail price of the toy will be needed to for a clear picture of the possible monetary risk or reward for introducing a new toy during the holiday season.

Toy 2 has past performance information available and this information will be crucial to decide on this toy for the coming holidays. Information on the two competitors will also be critical, are the toys of a similar price point? What is the probability that name recognition carries Toy 2 through the holiday season as the top choice? Customer information from a survey could provide their likelihood to choose the Choice Toys product.

As the executive making the minimax choice, one that minimizes the max cost to the company, will be key for the success of the chosen toy (Sharp et al, 2019). Toy 1 will be entering the market during the holiday season, untested, which could make the toy a liability. Toy 2 has a loyal following and production methods are already in place for the toy, making the potential manufacturing impact less than that of Toy 1.

References

Sharpe, N. D., De Veaux, R. D., & Velleman, P. F. (2019). Business statistics (4th ed.). https://platform.virdocs.com

What is our sale price?

What is our target market? (How much would a proper marketing campaign cost to reach them?)

Data for Toy 2:

What is the sale price of our competitors?

What is the market share from the previous holiday season?

When did demand for our product peak?

How did our product compare to the competition? (Conducting a survey)

Can we make our supply chain more efficient?

Do we know our current cost to manufacture?