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A product is being considered and the market for the item may be Favorable or Unfavorable, the company must decide if it is worth
A product is being considered and the market for the item may be Favorable or Unfavorable, the company must decide if it is worth having the product reviewed by professionals. If the product is successful the profit is $750,000 if the product is a failure then a negative payoff of $-250,000 results. Probability of Favorable =0.80. What is the EVofPI for Do Not Review? Review Do Not Review 3 Favorable 4 Unfavorable 5 Success 750 0.75 Accept Failure 0.25 -250 Reject 0 Success 0.417 750 A ccept Failure -250 0.583 Reject 0 Success 0.65 750 Accept Failure -250 0.35 Reject 0
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