MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with production of a new t

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Macdonald Products Inc Of Clarkson New York Has The Option Of A Proceeding Immediately With Production Of A New T 1 (39.84 KiB) Viewed 19 times

MacDonald Products, Inc., of Clarkson, New York, 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 $540 each, with a probability of 0.69 and a 0.31 probability of 65,000 at $540. If, however, he uses the value analysis team (option b), the firm expects sales of 85,000 units at $740, with a probability of 0.67 and a 0.33 probability of 60,000 units at $740. Value engineering, at a cost of $115,000, is only used in option b. Which option has the highest expected monetary value (EMV)? The EMV for option a is $ and the EMV for option b is $. Therefore, option expected monetary value. (Enter your responses as integers.) has the highest