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What's the best decision strategy? and What's the maximum expected profit? North Mountain is reviewing whether it should launch a line of children's Outerwear. It
What's the best decision strategy? and What's the maximum expected profit?
North Mountain is reviewing whether it should launch a line of children's Outerwear. It is looking at two designs, Snowman and Ice Tiger. The snowman design is similar to other styles of clothing they have offered before and they estimate that there is an 80% chance that it will be successful with a profit of $150,000 and only a 20% chance of failure with a loss of $50,000. Ice Tiger is estimated to have only a 40% chance of success, but with a profit of $250,000 and if it fails, the loss will be just $25,000. Success or failure can be assessed early in the season, so if it is clear that IceTiger is failing, they could reduce prices and increase advertising. This strategy is estimated to have a 60% chance of achieving a profit of $80.000, but there is a 40% chance that it will increase the loss to $70,000. Suppose that the decision-making criterion is EMVStep by Step Solution
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