Business, 11.03.2020 17:54 Rusven

MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing or (b) having the value analysis team complete a study. If Ed Lusk, VP for operations, proceeds with the existing prototype (option a), the firm can expect sales to be 95 comma 000 units at $600 each, with a probability of 0.46 and a 0.54 probability of 65 comma 000 at $600. If, however, he uses the value analysis team (option b), the firm expects sales of 80 comma 000 units at $750, with a probability of 0.61 and a 0.39 probability of 70 comma 000 units at $750. Value engineering, at a cost of $100 comma 000, is only used in option b. Which option has the highest expected monetary value (EMV)?

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MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with p...

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