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MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with production of a new lop-of-the-ine steroo TV that has just
MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with production of a new lop-of-the-ine steroo TV that has just completed prototype testing of (b) having the value ansibsis team complete a study. If Tyrone Martin, VP for operations, procoeds with the existing prototype (option a), the firm can expect sales to be 85,000 units at $020 each, with a probability of 0.69 and a 0.31 probability of 65,000 at $620. If, however, he uses the value analysis toam (option b), the firm expects sales of 75,000 units at $710, with a probability of 0.66 and a 0.34 probabilify of 60,000 units at $710. Valve engineering, at a cost of $100,000, is only used in option b. Which option has the Nighest expected monetary value (EMV)? The EMV for option a is $ and the EMV for option b is 1 Therefore, option has the highest expected monetary value. (Enter your responses as intogers.)
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