4-14. Prince Windows, Inc. makes high-quality windows for the residential home m

Question

4-14. Prince Windows, Inc. makes high-quality windows for the residential home market. Recently, three marketing managers were asked to assess the probability that sales for next year will be more than 15% higher than the current year. One manager stated that the probability of this happening was 0.40. The second manager assessed the probability to be 0.60, and the third manager stated the probability to be 0.90. a. What method of probability assessment are the three managers using? b. W hich manager is expressing the least uncertainty in the probability assessment? c. Why is it that the three managers did not provide the same probability assessment?

Explanation / Answer

Please see the answers to your questions below: -

a. The method used for proabability assesment is relative frequency based on previous history.

b. The manager who is having the highest probability i.e. third manager is expressing the least uncertainty in probability assesment.

c. The three managers providing the probabilities are independent and hence there would be independent events in this case. The case of managers providing probabilities are not dependent on each other.

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