Question

Question: I need help with the excel spreadsheet. Can you please do the spreadsheet for me? Thank you so much. Cooper Pharmaceuticals, a specialty pharmaceutical company, has made significant investments to develop several product lines of 3D printed drugs. However, with patents on some of its most popular brand-name drugs expiring in the near future, the company is expecting a significant financial hit. As a result, the Finance Department has determined that only two of the five product lines under development can continue to be supported at this time. As part of this decision, Cooper Pharmaceuticals must consider the likelihood of approval from the U.S. Food and Drug Administration (FDA) for the 3D printing of each product for consumer use.Link to the excel sheet for table ex.3.9 is Table EX 3.9Preview the document . It shows the potential revenues (in millions of dollars) for each of the alternative product lines and the likelihood of FDA approval.

Table EX 3.9

                                             Payoff: Revenues (in $millions) and Probability of FDA Approval

Product Line                                  Likely                             Even Chance                           Unlikely

Alpha                                      250 [p = 0.35]                         140 [p = 0.45]                         (20) [p = 0.20]

Beta                                       280 [p = 0.40]                         155 [p = 0.35]                         (25) [p = 0.25]

Gamma                                  425 [p = 0.35]                          245 [p = 0.45]                         (45) [p = 0.20]

Delta                                      550 [p = 0.25]                         300 [p = 0.40]                         (60) [p = 0.35]

Kappa                                    450 [p = 0.30]                          275 [p = 0.25]                        (18) [p = 0.45]

1.Under an optimistic strategy, which two product lines would be selected for continued research and development?

2.Under a pessimistic strategy, which two product lines would be selected for continued research and development?

3.Using the minimax regret strategy, which two product lines would be selected for continued research and development?

4.Using the expected value model, which two product lines would be selected for continued research and development?

5.A research report was released that outlines serious concerns about the effectiveness of 3D printed Gamma drugs. This report is believed to change the probability of FDA approval for 3D printed Gamma drugs so that approval is now 15 percent likely, 45 percent even chance, and 40 percent unlikely. Use the expected value model to determine whether the product line selection changes given these new probabilities.

Answer 1

Soluton Given that Cooper phramoceuticals, o specaltg Compny, has made sign cant investments to develop several prod니다 payoff: Revenues (In $mfilr ons) an d produundty o Onoduet lrkely Even chance Line AlPha 155 LP o.35 945 LP 0.40 Delta55 0 LP-.5 450 LP-o, 30 Optimist'c Strategg: opt mtshc strategy tooks at the best that could happen under each acHon and then chooses the acHon ω'th the largest value. Large payo d fanore the probabilretes Each p:nduce, Maz? mum Cal terror ts used and ofs an Largest value s selected as htgh /'ghted a bold Toproduc nes selecked fo contnued RAo abe the One wt hghest vale among all products are Delta and Kappa

Pessimtstfc Strategys In ths pessfmrstre St rateg Looks at the usos could happen unde Each actton and then choose the actHon oth the largest pay off The Smallest payoff undeγ Each product then, yoy take the best * Tuo products "nesseected for continued R+ are the ones worth tghest valu amoaall bold In the above table, are kappa and Alphą. MiniMax Reqret strategy: Maximum payoffs unde» each state of natuse shouor in bold , in the payoff table below. Now we wori, create opportun, SH c loss table. Each element tn the opportuntstc oss table s found takfng each state of nature 4 at a tfme, and Subt autng each payoif fiom the largest payoff for e each Po State of nature choose the Smast of these becacuse we are the ones wofth lowest lo value amona "bold fn the bove table, are delta P kappA Expectedvalue Mode alate expeched value for each pmoduet, multr pl Pj the pagof by the psobabrty of that Payotf occufra t add values togeter

16-475 87.5+63-4 Expected value CAipha)- 146.5 Expected value (Beta)-asoxo 4 0+15 Sxo 35 (5)0.03 =ヲ2t5u.ar 4a5xo 35+45x0 4 Expected value Chamma + C45) xo-20 F1487 5to. 5-9 : Expected value Gamma)- 50 * E pected value CDelta): 550 xo-a5+3оохо.to Expected valoe CDelta) 36.5 135t68-35-8., ●Expected value CKarra)-,45.65 Tuwo product Ifnes Selected for contned RAD are the ones otth htghest expected value, ae Gianma fDelta

Expected value Cchange in Gamma probay) only Shamma drug probabrirtyts changed recalculate Expected value for Gamma Expected value Cenamma)- 1+25X 5 1845xo45 +45)xov4 ס63 ,75 +,10.35-g Expecteo vale CGamma) -156 TooPsoduct lnes Selecte d fo contnued Rto are the ones urth hỉghest expected value Delta and Kappa