As the product manager for a large company, you are in the position of choosing one of three new products to be marketed. Development and prototype production have been completed as well as pricing studies (see Table 2). Only one product can be introduced. Market research studies have determined that the discrete probability distributions for sales of each product shown in Table 3 are good approximations.

a.) [15pts] Compute the EMV for each product. Explain your assumptions for calculating the EMV (i.e., are you computing the EMV of cost, price, or profit?).

b.) [10pts] How robust is your decision to changes in unit price or unit cost of up to 50%?

c.) [15pts] Construct the risk profile and cumulative risk profile for these products. Are any dominance criteria exhibited?

d.) [10pts] Which product would you recommend? Suppose the company wanted to ensure at least 3,000 units were sold. Would you change your recommendation? Why or why not?

Table 1. Pricing studies for three proposed products.

Product	Unit Price	Unit Cost
A	$2.50	$1.50
B	$6.00	$4.00
C	$3.75	$2.25

Table 2. Market research sales production (as probability mass function).

Units Sold (X)	Pr(A Units Sold = X)	Pr(B Units Sold = X)	Pr(C Units Sold = X)
0	0	0.1	0.1
1,000	0	0.2	0.3
2,000	0.1	0.2	0.3
3,000	0.1	0.4	0.2
4,000	0.2	0.1	0.1
5,000	0.6	0	0