Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Statistics and Probability Expert

Polar, Inc. and ILEN are the two largest companies that produce and sell database software. They each have been negotiating to buy DSOFT, the third largest company in the database software market. Polar currently has 50% of the world market for database software, ILEN has 35%, DSOFT has 10%, and there are several other smaller companies that share the remaining 5% of the market for database software. Financial and market analysts at Polar have estimated the value of DSOFT to be $300 million in net worth. Throughout the preliminary negotiations, DSOFT has made it clear that they will not accept a purchase offer below $300 million. Jacob Pratt, the CEO of Polar, figures that acquiring DSOFT will make Polar the dominant player in the industry as Polar would then have 60% of the market. In addition, Jacob knows that DSOFT has been developing a new product that has tremendous earnings potential. Jacob has estimated that the new product would increase the net worth of DSOFT by an additional $300 million with probability 0.50, by an additional $150 million with probability 0.30, or have no impact on net worth with probability 0.20. To simplify matters, Jacob has decided to consider three possible strategies regarding the possible purchase of DSOFT: (i) Make a "high" offer of $400 million; (ii) make a "low" offer of $320 million; or (iii) make no offer at all. If he pursues this third strategy (making no offer), Jacob is certain that ILEN will buy DSOFT. If Polar makes an offer to DSOFT (either a "high" or a "low" offer), Jacob figures that ILEN will increase the offer further. He is uncertain about what ILEN will offer in this case, but he has made the following intelligent estimates of possible outcomes: ILEN would increase Polar's offer by 10% with probability 0.30, by 20% with probability 0.40, or by 30% with probability 0.30. If ILEN were to make such an offer, Jacob would then need to decide whether he would make a final offer to DSOFT. His thinking is that after ILEN makes a counter-offer, Polar would either withdraw from the bidding, match the counter-offer, or make a final offer at 10% above ILEN's counter-offer. If Polar's offer and ILEN's offer are identical, Jacob estimates that the probability that DSOFT will accept Polar's final offer is 0.40 ; however, if Polar counters with an offer which is 10% higher than ILEN's offer, Jacob estimates that DSOFT will accept Polar's final offer with probability 0.60.

Assignment:
(a) Structure Polar's acquisition offer problem as a decision tree.
(b) Solve for the optimal decision strategy for Polar.

Statistics and Probability, Statistics

  • Category:- Statistics and Probability
  • Reference No.:- M998356

Have any Question? 


Related Questions in Statistics and Probability

A consumer psychologist asked to test a claim by a swimming

A consumer psychologist asked to test a claim by a swimming school that its instructors could teach the average seven-year-old to swim across an Olympic-sized pool in less than 2 minutes. The psychologist arranged for ei ...

Let n y fiiisinn s p be an aumann model of incomplete

Let (N, Y, (F i ) i ∈N , s, P) be an Aumann model of incomplete information with beliefs, and let W ⊆ Y be an event. Prove that (N,W, (F i  ∩ W) i ∈N  , P(· | W)) is also an Aumann model of incomplete information with be ...

What would the null and alternate hypothesis be for the

What would the null and alternate hypothesis be for, " The airlines claim that complaints average less than 15 per month per airport. To investigate the problem an independent watchdog agency contacted a random sample of ...

1 consider a test of h0 mu le 100 versus h1 mu gt 100

1. Consider a test of H0 : μ ≤ 100 versus H1 : μ > 100. Suppose that a sample of size 20 has a sample mean of X = 105. Determine the p-value of this outcome if the population standard deviation is known to equal  (a) 5; ...

A scarf company built a new parking garage in a business

A Scarf Company built a new parking garage in a business district. For a random sample of 100 days, daily fees collected averaged $1,800, with a standard deviation of $500. Construct a 90% confidence interval estimate of ...

In a recent funding drive in support of classical radio it

In a recent funding drive in support of classical radio, it was announced that 11.35% of the listeners actually donated to the radio station. A survey of 225 listeners found that 10.75% of the listeners had actually dona ...

Problem 1 part i hypothesis testingconduct a one-tailed

Problem 1: PART I. HYPOTHESIS TESTING Conduct a one-tailed hypothesis test given the information below. A manufacturer wants to increase the shelf life of a line of cake mixes. Past records indicate that the average shel ...

All the customers who entered a store on a particular day

All the customers who entered a store on a particular day were given a surgery to fill out concerning their opinions of the service at the store? What type of sample is this? I can't decide between voluntary response or ...

For each experiment described below identify any confounds

For each experiment described below, identify any confounds that may be present. (Be careful not to identify things as confounds that are not.) Then, redesign each study to eliminate any confounds that you find. Write a ...

Tell which measures are resistant to outliers and which are

Tell which measures are resistant to outliers and which are NOT resistant to outliers from the following list, and explain WHY or WHY NOT for each measure: Mean, median, Quartiles, correlation, and standard deviation.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro