Howard Weiss Inc. is considering building a sensitive new airport scanning devive. His managers believe that there
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Question:
Howard Weiss Inc. is considering building a sensitive new airport scanning devive. His managers believe that there is a probability of 0.4 that the ATR Co. will come out with a competitive product. If Weiss adds an assembly line for the product and ATR Co. dies not follow with a competitive product, Weiss expected profit is $40, 000; if Weiss adds an assembly line and ATR follows suit, Weiss still expects $10,000 profit. If Weiss adds a new plant addition and ATR dies not produce a competitive product, Weiss exoects a profit of $600,000; if ATR does compete for thus market, Weiss exoects a loss of $100,000.
(a) Determine the EMV of each decision.
(b) Compute the expected value of perfect information.
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