Decision 1: Continue development and market the new product % decrease in all sales volumes 0% Fixed cost $8,000 EMV for decision 1 -$1,498 Unit margin $15 sensitivity analysis to percentage decrease in all sales volumes Market Probability Sales volume Net revenue %decrease EMV for decision 1 Great 0.55 600 $9,000 e Fair 0.30 300 $4,500 5% 0 Awful 0.15 90 $1,350 10% 1 All Monetary values (except the unit margin 15% 2 EMV in Cell B5)are in $1000 and all sales volumes are in 1000s of units 20% 3 4 Decision 2: Stop development and abandon product 5 No payoffs, no costs, no uncertainty 6 EMV 7 8 9 0 1 2 3 HW_05 4 5 1. If Acme company (HW_05.xlsx) makes the following changes from our demonstrated example in its bid: 1) change the fixed cost to $8000: 2) change probabilities of Great. Fair and Awful to 0.55, 0.30, and 0.15 respectively: 3) the unit margin is $15. 6 (Please note that all changes have been reflected in Hw_05.xlsx) 7 8 Please reconsider that 9 1) whether Acme company should market the new product or abandon it, and 2) perform the sensitivity analysis if all sales volumes are decreased by 5%, 10%, 15%, and 20%. 0 1 Decision 1: Continue development and market the new product % decrease in all sales volumes 0% Fixed cost $8,000 EMV for decision 1 -$1,498 Unit margin $15 sensitivity analysis to percentage decrease in all sales volumes Market Probability Sales volume Net revenue %decrease EMV for decision 1 Great 0.55 600 $9,000 e Fair 0.30 300 $4,500 5% 0 Awful 0.15 90 $1,350 10% 1 All Monetary values (except the unit margin 15% 2 EMV in Cell B5)are in $1000 and all sales volumes are in 1000s of units 20% 3 4 Decision 2: Stop development and abandon product 5 No payoffs, no costs, no uncertainty 6 EMV 7 8 9 0 1 2 3 HW_05 4 5 1. If Acme company (HW_05.xlsx) makes the following changes from our demonstrated example in its bid: 1) change the fixed cost to $8000: 2) change probabilities of Great. Fair and Awful to 0.55, 0.30, and 0.15 respectively: 3) the unit margin is $15. 6 (Please note that all changes have been reflected in Hw_05.xlsx) 7 8 Please reconsider that 9 1) whether Acme company should market the new product or abandon it, and 2) perform the sensitivity analysis if all sales volumes are decreased by 5%, 10%, 15%, and 20%. 0 1