Two different designs on a new line of winter jackets for the coming winter are available...

Two different designs on a new line of winter jackets for the coming winter are available for your manufacturing plants. Your profit (in thousands of dollars) will depend on the taste of the consumers when winter arrives. The probability of the three possible different tastes of the consumers and the corresponding profits are presented in the following table.

Probability Taste Design A Design B

0.2 more conservative 180 520

0.5 no change 230 310

0.3 more liberal 350 270

1) If you decide to choose Design A for 70% of the production lines and Design B for the remaining production lines, what is the coefficient of variation of your investment?

2) If you decide to choose Design A for 90% of the production lines and Design B for the remaining production lines, what is the expected profit?

3) If you decide to choose Design A for 90% of the production lines and Design B for the remaining production lines, what is the risk of your investment ?

Expert Solution

orchestra answered 1 year ago

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