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Business, 21.02.2020 23:51 kashaallen492

MacDonald Products, Inc., of Clarkson, New York, has the option of proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing or 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 90,000 writs at $540 each with a probability of 0.32 and a 0.68 probability of 80,000 at $540. If, however, he uses the value analysis team (option b), the firm expects sales of 90,000 units at $750, with a probability of 0.75 and a 0.25 probability of 60,000 units at $750. Value engineering at a cost of $95,000, 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 proceeding immediately with produ...
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