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The Red Hen company is launching its new food for sale in supermarkets throughout Michigan. The...

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General Management

The Red Hen company is launching its new food for sale insupermarkets throughout Michigan. The sales department is convincedthat its spicy chicken soup will be a great success. The marketingdepartment is considering an intensive advertising campaign. Theadvertising campaign will cost $2,000,000 and if successful produce$9,600,000 in added revenue. If the campaign is less successful(25% chance), the added revenue is estimated at only $3,600,000. Ifno advertising is used, the revenue is estimated at $7,000,000 withprobability 0.7 if customers are receptive and $3,000,000 withprobability 0.3 if they are not.

Question 1. Write an equation to calculate the expected valuefor each decision as a function of the probability that the majoradvertising campaign will be effective (p)?

Answer & Explanation Solved by verified expert
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The Decision Tree diagram of the Red hen company is asfollowsDecision 1 When the company goes withthe decision to conduct a marketing    See Answer
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