help with assgn - 2 tasks - due in 1 week

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Overview of Assessment Managers are required to organize, interpret, and display data that is reliable and relevant to the real-world decisions they must make in their businesses. The use of analytical tools will improve your ability to use data to make informed decisions. In this task, you will address the business situation in this attachment's scenario. You will access the scenario and dataset by entering your student ID number in the “Start” tab of this “Decision Tree Analysis” attachment. The scenario and dataset are located in the “Decision Tree Scenario” tab. Using this dataset, you will perform a decision tree analysis and recommend a solution. This recommendation will be included in a report you will write, summarizing the key details of your analysis.

Data-Driven Decision Making

QUM3 Task 2: Decision Tree Analysis

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/xl/drawings/drawing1.xml#'Decision%20Tree%20Scenario'!A1

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Decision Tree Scenario

Task 2: Decision Tree Analysis Scenario Decision tree analysis is used to determine a recommended decision alternative or an optimal decision strategy when a decision-maker is faced with an uncertain and risk-filled pattern of future events. The goal of decision tree analysis is to identify the best decision alternative, or the optimal decision strategy, given information about the uncertain events and the possible payoffs of selections. You are the chief operating officer (COO) at Major Pharmaceutical Company (MPC). The chief executive officer (CEO) of MPC has asked you to review the company business plan for drug line development. You have been given a market research report that includes the state of the drug marketplace with probabilities and payoffs (see below and on the "Data Analysis Template" tab). You are charged with presenting an analysis report of the plan, including recommending a course of action. The CEO wants to know the best immediate action, along with a backup action, and wants clarity based on your recommendations. You will consider the following possible active alternative actions: 1) develop a new drug (exploration) or 2) focus on modifications to an existing drug (exploitation of new applications). Within these two alternatives are two possible states for market conditions. You must consider the probability of success and the payoffs to determine the course of action based on the calculated expected values. You have been provided with the market research report data. You are to use the data from the market research to complete the task, including payoff boxes on a decision tree diagram. Then, you may use the lower table on the template to show how you determined expected values for each state of nature node.
MARKET RESEARCH REPORT
MPC contracted with Drug Markets Analysts Inc. (DMA). Based on competitive research, DMA has found that there are new competing drugs recently granted FDA approval. MPC will need to be aware of the competition in the market as they consider whether to develop a new drug line, exploit the existing drug line for potential new applications, or simply continue with the current drug line at this time. The new formula is a clear advancement developed under strict guidelines and is scheduled for FDA approval in the first quarter of the year. Currently, there are only two other widely available products on the market that meet the same needs. In a highly favorable market that is supported by MPC's drug offering being considered the better solution, a new drug line with have 70% likelihood of success with a demand of 4133 units per month, the existing drug will have a 62% likelihood with a demand of 5577 units per month, and making no changes will be 78% likely to succeed with a demand of 657 units per month. In an unfavorable market, a new drug line will have a demand of 1355 units per month, the existing drug will have a demand of 1911 units per month, and making no changes will have a demand of 258 units per month. Profits are estimated to be 0.64 per unit for the new drug line, 0.76 per unit for the existing drug line with new FDA-approved uses, while the current profit is 0.86 per unit.

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/xl/drawings/drawing2.xml#'Data%20Analysis%20Template'!A1

Data Analysis Template

Guidance:
You will use the scenario and market research report to complete this task.
Market Research Report
MPC contracted with Drug Markets Analysts Inc. (DMA). Based on competitive research, DMA has found that there are new competing drugs recently granted FDA approval. MPC will need to be aware of the competition in the market as they consider whether to develop a new drug line, exploit the existing drug line for potential new applications, or simply continue with the current drug line at this time. The new formula is a clear advancement developed under strict guidelines and is scheduled for FDA approval in the first quarter of the year. Currently, there are only two other widely available products on the market that meet the same needs. In a highly favorable market that is supported by MPC's drug offering being considered the better solution, a new drug line with have 70% likelihood of success with a demand of 4133 units per month, the existing drug will have a 62% likelihood with a demand of 5577 units per month, and making no changes will be 78% likely to succeed with a demand of 657 units per month. In an unfavorable market, a new drug line will have a demand of 1355 units per month, the existing drug will have a demand of 1911 units per month, and making no changes will have a demand of 258 units per month. Profits are estimated to be 0.64 per unit for the new drug line, 0.76 per unit for the existing drug line with new FDA-approved uses, while the current profit is 0.86 per unit.
A. Describe a business question that could be answered by applying decision tree analysis and is derived from the scenario.
B. Identify the relevant data values required for your decision tree analysis, including the following: • probabilities • profits • demand
C1. Complete a decision tree diagram, including each of the following: • state-of-nature nodes • calculated payoffs, each expressed out to two decimal places • expected values, each expressed out to two decimal places
PAYOFF
Calculate the Expected Value (EV) of each node.
State of Nature
Enter decision selection based on EV (your final decision node):
Calculation for Expected Value (EV)
State of Nature
Calculation for Expected Value (EV)
State of Nature
Calculation for Expected Value (EV)

assignment

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DATA SET 1

Probability Annual Demand Units
Low (Unfavorable market) High (Favorable market) Profit Per Unit Low (Unfavorable market) High (Favorable market) ALTERNATIVES
28% 72% 0.62 1205 4341 DEVELOP NEW DRUG
36% 64% 0.47 1807 5475 EXPLOIT EXISTING DRUG
18% 82% 0.83 241 730 DO NOTHING
MPC contracted with Drug Markets Analysts Inc. (DMA). Based on competitive research, DMA has found that there are new competing drugs recently granted FDA approval. MPC will need to be aware of the competition in the market as they consider whether to develop a new drug line, exploit the existing drug line for potential new applications, or simply continue with the current drug line at this time. The new formula is a clear advancement developed under strict guidelines and is scheduled for FDA approval in the first quarter of the year. Currently, there are only two other widely available products on the market that meet the same needs. In a highly favorable market that is supported by MPC's drug offering being considered the better solution, a new drug line with have 72% likelihood of success with a demand of 4341 units per month, the existing drug will have a 64% likelihood with a demand of 5475 units per month, and making no changes will be 82% likely to succeed with a demand of 730 units per month. In an unfavorable market, a new drug line will have a demand of 1205 units per month, the existing drug will have a demand of 1807 units per month, and making no changes will have a demand of 241 units per month. Profits are estimated to be 0.62 per unit for the new drug line, 0.47 per unit for the existing drug line with new FDA-approved uses, while the current profit is 0.83 per unit.

DATA SET 2

Probability Annual Demand Units
Low (Unfavorable market) High (Favorable market) Profit Per Unit Low (Unfavorable market) High (Favorable market) ALTERNATIVES
24% 76% 0.68 1205 4966 DEVELOP NEW DRUG
40% 60% 0.98 1807 5377 EXPLOIT EXISTING DRUG
12% 88% 0.84 541 1101 DO NOTHING
MPC contracted with Drug Markets Analysts Inc. (DMA). Based on competitive research, DMA has found that there are new competing drugs recently granted FDA approval. MPC will need to be aware of the competition in the market as they consider whether to develop a new drug line, exploit the existing drug line for potential new applications, or simply continue with the current drug line at this time. The new formula is a clear advancement developed under strict guidelines and is scheduled for FDA approval in the first quarter of the year. Currently, there are only two other widely available products on the market that meet the same needs. In a highly favorable market that is supported by MPC's drug offering being considered the better solution, a new drug line with have 76% likelihood of success with a demand of 4966 units per month, the existing drug will have a 60% likelihood with a demand of 5377 units per month, and making no changes will be 88% likely to succeed with a demand of 1101 units per month. In an unfavorable market, a new drug line will have a demand of 1205 units per month, the existing drug will have a demand of 1807 units per month, and making no changes will have a demand of 541 units per month. Profits are estimated to be 0.68 per unit for the new drug line, 0.98 per unit for the existing drug line with new FDA-approved uses, while the current profit is 0.84 per unit.

DATA SET 3

Probability Annual Demand Units
Low (Unfavorable market) High (Favorable market) Profit Per Unit Low (Unfavorable market) High (Favorable market) ALTERNATIVES
30% 70% 0.64 1355 4133 DEVELOP NEW DRUG
38% 62% 0.76 1911 5577 EXPLOIT EXISTING DRUG
22% 78% 0.86 258 657 DO NOTHING
MPC contracted with Drug Markets Analysts Inc. (DMA). Based on competitive research, DMA has found that there are new competing drugs recently granted FDA approval. MPC will need to be aware of the competition in the market as they consider whether to develop a new drug line, exploit the existing drug line for potential new applications, or simply continue with the current drug line at this time. The new formula is a clear advancement developed under strict guidelines and is scheduled for FDA approval in the first quarter of the year. Currently, there are only two other widely available products on the market that meet the same needs. In a highly favorable market that is supported by MPC's drug offering being considered the better solution, a new drug line with have 70% likelihood of success with a demand of 4133 units per month, the existing drug will have a 62% likelihood with a demand of 5577 units per month, and making no changes will be 78% likely to succeed with a demand of 657 units per month. In an unfavorable market, a new drug line will have a demand of 1355 units per month, the existing drug will have a demand of 1911 units per month, and making no changes will have a demand of 258 units per month. Profits are estimated to be 0.64 per unit for the new drug line, 0.76 per unit for the existing drug line with new FDA-approved uses, while the current profit is 0.86 per unit.

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