MS in Business Analytics

MS in Business Analytics
Course: Analytics in Business: Fall 2018
Out-Class Individual Assessment – 20 Points
Q1: (20 marks)
You are a marketing manager for cleaning products company. You are considering the
introduction of a new brand of washing machine powder; you need to develop a marketing plan
for the product in which you must decide whether you will have a step by step introduction of
the product, or a concentrated introduction of the product.
The risk is you will lose $600,000 if you choose a concentrated introduction and the demand
for the product is low.
However, if the demand is high, you estimate that your first year’s profit will be $700,000 for
a step by step introduction and $1,000,000 for a concentrated introduction.
1) Construct a payoff table for these two alternative courses of decisions.
2) Determine the optimal decision based on the maximax criterion.
3) Determine the optimal decision based on the maximin criterion.
4) Determine the optimal decision based on regret criterion.
5) Determine the optimal decision based on maximum likelihood criterion.
6) Determine the optimal decision based on expected value criterion.
MS in Business Analytics
Course: Analytics in Business: Fall 2018
Out-Class Group Assessment – 40 Points
Q1: (30 marks)
A company that runs a social media platform receives an offer to sell their users’ data to a
data analysis company for $50,000.
If the company decides to perform the analysis itself, and interesting patterns are found (with
2/3 probability), the company can sell those patterns for a revenue of $400,000.
The data analysis process will cost $50,000.
 Draw the payoff table and find the optimal solution using the five decision models
discussed in class.
The company can hire a consultant before doing the analysis to know how interesting their
data is, hiring a consultant will cost $20,000. If this consultation is successful (which
according to experience happens with probability of 0.4) there is a 0.5 probability that the
pattern is interesting. Otherwise, (the case of unsuccessful consultation) the data is useless
with 6/7 chance.
 Draw a decision tree that illustrates this decision problem.
 If the company receives a higher offer for selling the data for $70,000, will this
change their decision?
 Another consultant offers to do this consultation, what is the breakeven amount that
the company could pay this consultant?
Q2: (10 marks)
A furniture company manufactures four products: chairs, tables, sofas, and beds.
Each of the products must pass through the following departments before they are shipped:
Contracting, Painting, Assembly, and Testing.
The time requirements in each department (hours) for each unit produced and its
corresponding profit values are summarized in this table:

The market survey indicates that the minimum demand of four models is 150, 100,300, and
400 units per hour respectively.
 What is the correct number of chairs, tables, sofas, and beds produced to ensure
optimal profit? list all four with the correct number for this scenario.
 What is the amount in dollars of the optimal profit in this scenario?