Qnt 561 Business Analysis

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Buy a Protection Plan or Not University of Phoenix QNT/561 September 23, 2009 Buy A Protection Plan or Not The decision to buy a protection plan or not creates a decision to make with probabilities. The purchase of widget’s and insurance policy helped to gather statistical data in a business context. Through analyzing the prices in the insurance fees and compensation this seems to create a business advantage and limitations reliant on the economy and resource availability. The economic influences potentially project estimated cost of future commitments and investments included in the business obligations, which tends to affect liquidity, capital, and resources. This paper will provide a business analysis using Bayes’ theorem, Business…show more content…
So, if I set event X = “the global economy’s status is bad”, I will have P(X|A) = 80% = 0.8. Similarly, looking up the times when his company’s product can export, I see that 20% of the times the global economy’s status is bad. This means P(X|B) = 20% = 0.1 There are enough probabilities to find the posterior probabilities by using Bayes’ theorem: P(X) = P(A).P(X|A) + P(B).P(X|B) = 0.05*0.8 + 0.95*0.1= 0.135 So the probability that the global economy’s status is bad is 0.135. => P(A|X) = P(AX)/P(X) = P(A).P(X|A)/P(X) = 0.05*0.8/0.135 = 0.296 P(B|X) = P(BX)/P(X) = P(B).P(X|B)/P(X) = 0.95*0.1/0.135 = 0.704 We can summarize the results above into the following table: |P(A) |0.05 | |P(B) |0.95 | |P(X|A) |0.8
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