• Welcome to the Cricket Web forums, one of the biggest forums in the world dedicated to cricket.

    You are currently viewing our boards as a guest which gives you limited access to view most discussions and access our other features. By joining our free community you will have access to post topics, respond to polls, upload content and access many other special features. Registration is fast, simple and absolutely free so please, join the Cricket Web community today!

    If you have any problems with the registration process or your account login, please contact us.

Statistics

alternative

alternative

Cricket Web Content Updater
Anyone know anything about statistics, if so i need some help here..

Your company, Animated Architects, is endeavouring to come to a decision on whether to sell its concept plan and preliminary designs for a multi-storey office building to the State Government now for $500,000 or to further develop the site plans and designs. If Animated further develop the designs, the State Government will either reject the plans and designs or sign Animated to a contract for either 1 or 2 years to complete the designs and oversee the construction. You have calculated the profit for each possible outcome and tabulated them in a pay-off table as follows:

Code: 
Decision	 
 		Develop    Sell Now   Prob.
Rejection	-500,000   500,000    0.2
1-year contract	750,000	   500,000    0.5
2-year contract	1,000,000  500,000    0.3
(a) Construct an opportunity-loss table.
(b) Calculate the expected opportunity loss for each business size.
(c) What is the optimal decision? Explain your answer.
Click to expand...
Neil's edit... Just reformatting so I can read the table...
 
Last edited by a moderator:
Neil Pickup

Neil Pickup

Cricket Web Moderator
Don't know what an opportunity-loss table is, but the basic concept behind the question seems to be:

If you sell the plans now, you make $500,000.
If you wait, then you've a 20% chance of losing $500k, a 50% chance of making $750k and a 30% chance of making $1000k - so, multiplying the percentages by the figures:

20% * -500 = -100
50% * 750 = 375
30% * 1000 = 300
Add them together - your guess is that, on average, if you develop the plans you'll make $575k.

Whether that's better than a definite $500,000 is down to interpretations of expected utility theory. Personally I'd take the $500k and be done with it, which is risk averse behaviour.
 
A

AussieDominance

Banned
Neil Pickup said:
Don't know what an opportunity-loss table is, but the basic concept behind the question seems to be:

If you sell the plans now, you make $500,000.
If you wait, then you've a 20% chance of losing $500k, a 50% chance of making $750k and a 30% chance of making $1000k - so, multiplying the percentages by the figures:

20% * -500 = -100
50% * 750 = 375
30% * 1000 = 300
Add them together - your guess is that, on average, if you develop the plans you'll make $575k.

Whether that's better than a definite $500,000 is down to interpretations of expected utility theory. Personally I'd take the $500k and be done with it, which is risk averse behaviour.
Click to expand...
why do you have to show up my knowledge neil and dont say im 7!:)
 
SeaMan

SeaMan

Banned
75% of all statistics are made up by some idiot on a cricket forum to try and prove his lameass point, as arguing with other losers is the only pleasure in life he gets since his date to the prom decided to go with her other cousin, and he realised he'd never ever get laid.
 
Langeveldt

Langeveldt

Soutie
SeaMan said:
75% of all statistics are made up by some idiot on a cricket forum to try and prove his lameass point, as arguing with other losers is the only pleasure in life he gets since his date to the prom decided to go with her other cousin, and he realised he'd never ever get laid.
Click to expand...
Seaman, leaving his mark
 
Burpey

Burpey

Well-known member
AussieDominance said:
i got a question why would you talk about getting laid on a cricket forum? and btw its entirely inappropiate for a forum
Click to expand...
One might say it's off topic.
 
C

cometer

Well-known member
An opportunity loss table from my understanding of opportunity loss anyway, i assume it's a similar term for opportunity cost but rather based around how much you'd lose if you made an action and an event occured, Anyways more to the point i think perhaps for (a) look at the payoffs for each outcome that can happen (ie rejection etc) and then for each of those outcomes highlight the option which is the best. That is given the outcome is rejection the best thing to do would be to sell now. For anything else its better to develop. Then basically redraw the payoff table but the values are going to be your opportunity losses. That is for example if you were to develop and they rejected then you'd have an opportunity cost of 1mill that is you would have lost -500k instead of 500k. Subtracting 500 - (-500) = 1mill OL. Thats basically your new value in the cell (Develop,Reject). Then basically repeat the method for the remaining options til you complete the table. I think thats what its asking but I wouldn't be certain of that. Then (b) and (c) are fairly trivial after that.
 
alternative

alternative

Cricket Web Content Updater
Thanx for that, i actually ended up using your methodology.. Found more info regarding that in book called Australian Business Statistics.. Hopefully thats correct... :)
 
alternative

alternative

Cricket Web Content Updater
cometer said:
:) Hopefully you chose to develop but you could argue the other way if you're quite risk averse.
Click to expand...
Yep yep, i did choose to Develop as the Expected Opportunity loss when developing was less compared with Selling them..
 
benchmark00

benchmark00

Well-known member
Yeah I did quantitative methods (stats).

Anova's are the gheyest part, that question seems straight forward enough though.
 
You must log in or register to reply here.
Top