The product design group of ABC Supplies has determined that it needs to design a new series of electric switches. It must decide on one of three design strategies. The better and more sophisticated the design strategy and the more time spent on value engineering, the less will be the variable cost. The chief of engineering design, Dr. W. Berry, has decided that the following costs are a good estimate of the initial and variable costs connected with each of three strategies: ·Low-tech: a low technology, low cost process consisting of hiring several new junior engineers. This option has a fixed cost of $45,000 and variable cost of $0.52 each.
·Subcontract: a medium-cost approach using a good outside design staff. This approach would have a fixed cost of $55,000 and variable cost of $0.45.
·High-tech: a high technology approach using the very best of the inside staff and the latest computer-aided design (CAD) technology. This approach has a fixed cost of $85,000 and variable cost of $0.40.
nDr Berry also estimated that the market forecast for the new series of switches may be different with the following probabilities:
·200,000 units with probability of 0.3
·180,000 units with probability of 0.5
·160,000 units with probability of 0.2.
The price per unit is planned to be $0.99.
Dr. Berry would like to identify the best decision based on the an expected monetary value (EMV) criterion
1. Draw a decision tree for this problem. Identify payoffs, and put them on the decision tree.
2. Calculate EMVs, identify and present the best solution. Show your calculations

steering wheels are always situated on the left side of the car.

always drive on the right side of the road.

white lines separate lanes of traffic traveling the same direction.

hashed or broken lines means you may change lanes when it is safe.

solid white lines mean stay in your lane.

yellow lines separate traffic moving in opposing directions.

hashed or broken yellow lines mean you can carefully pass, paying attention to oncoming traffic.

never cross a solid yellow line (or double yellow line).

when turning left at an intersection, pass in front of any cars that are turning left from the opposing direction (do not try to pass behind them).

use the left lane to pass other cars traveling your direction.

do not pass in the right lane unless absolutely necessary.

if you are driving in the far left hand lane and someone would like to pass you, move over to the right lane when it is safe to do so and allow them to pass.

you must always yield to pedestrians.

come to a complete stop whenever you see pedestrians trying to cross the street.

never pass a school bus if it has flashing red lights. wait until the lights have stopped.

be aware of bicyclists. often they share the road with cars and are supposed to also follow general traffic laws.

be particularly careful about driving in cities with bike lanes -- always check before turning that a bike is not coming.

it is mandatory to pull over or stop at an intersection to allow an emergency vehicle to pass you if you see one traveling with lights flashing and/or a siren running.

do not overuse your car horn. horns are used almost exclusively for emergency situations or for when you feel unsafe.

explanation:

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