Products, Inc., of Quebec City, has the option of (a) proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing or (b) having the value analysis team complete a study. If Ed Lusk, VP for operations, proceeds with the existing prototype (option a), the firm can expect sales to be 100,000 units at $530 each, with a probability of 0.74 and a 0.26 probability of 70,000 at $530.

If, however, he uses the value analysis team (option b), the firm expects sales of 75,000 units at $760, with a probability of 0.62 and a 0.38 probability of 65,000 units at $760.

Value analysis, at a cost of $105,000, is only used in option b. Which option has the highest expected monetary value (EMV)?

Part 2

The EMV for option a is (enter your response here) and the EMV for option b is (enter your response here.)

Therefore, option

a

b

has the highest expected monetary value.

(Enter your responses as integers.)