Based on this information, what is the best option for the company? and why?

 

A company needs to make a decision on which technology is going to use for the manufacturing of a new line of products. The requirements of the market segment which is going to be addressed determine that the producto will be sellable only if it has zero defects. A faulty unit, even with slight imperfections, will not be sellable. We also know that, throughout the whole life cycle of the new product, the company expects to manufacture 100 K units. The cost of manufacturing, regardless whether the unit is perfect or has defects, is 75 / unit The selling price for the perfect units is 150 / unit The available options are characterized as follows: 1) Option A: - There is a 90% probability that 59% of units are perfect - There is a 10% probability that 64% of units are perfect - The fixed cost of this option, throughout the life cycle of the product, is 1 M 2) Option B: - There is a 80% probability that 64% of units are perfect - There is a 20% probability that 59% of units are perfect