Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Modern Electronics specializes in manufacturing modern electronic components. It also builds the equipment that produces the components. Modern Electronics is considering building a new facility
Modern Electronics specializes in manufacturing modern electronic components. It also builds the equipment that produces the components. Modern Electronics is considering building a new facility but the estimated profits would be impacted by the type of market that develops. The probability for a strong market is 0.4; for a fair market is 0.4; and for a poor market is 0.2. You are responsible for advising the president of Modern Electronics on the type facility that should be built or to not build a facility at all. The table shows the estimated profits under each market and for each size facility. Build a large facility Build a medium-size facility Build a small facility Do not build a facility Strong Market 550,000 500,000 250,000 0 Estimated Profits Fair Market 150,000 125,000 75,000 0 Poor Market -500,000 -150,000 -25,000 0 1. What is your recommendation to the president based on expected value that maximizes profits (EMV). Answer: Explanation (include expected monetary value): Software Output: 2. Provide a second recommendation to the president that minimizes regret. Answer: Explanation (include expected monetary value): Software Output
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started