A manager is considering whether to make product A or product B, but only one can be produced .

The estimated sales demand for each product is uncertain. A detailed investigation of the possible sales demand for each product gives the following probability distribution of the profits for each product:

Which product should the company make?

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(1) Product A probability distribution (2) Estimated (3) Weighted (col. 1 Outcome probability amount x col. 2) () Profits of 6000 0.10 600 Profits of 7000 0.20 1400 Profits of 8000 0.40 3200 Profits of 9000 0.20 1800 Profits of 10000 0.10 1000 1.00 Expected value 8000 Product B probability distribution (1) (2) (3) Estimated Weighted (col. 1 Outcome probability amount x col. 2) () Profits of 4000 0.05 200 Profits of 6000 0.10 600 Profits of 8000 0.40 3200 Profits of 10000 0.25 2500 Profits of 12000 0.20 2400 1.00 Expected value 8900