Zhu Manufacturing is considering the introduction of a family of new products. Long-term demand for the product group is

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Zhu Manufacturing Is Considering The Introduction Of A Family Of New Products Long Term Demand For The Product Group Is 1 (140.6 KiB) Viewed 12 times

Zhu Manufacturing is considering the introduction of a family of new products. Long-term demand for the product group is somewhat predictable, so the manufacturer must be concerned with the risk of choosing a process that is inappropriate. Faye Zhu is VP of operations. She can choose among batch manufacturing or custom manufacturing, or she can invest in group technology. Zhu won't be able to forecast demand accurately until after she makes the process choice. Demand will be classified into four compartments: poor, fair, good, and excellent. The table below indicates the payoffs (profits) associated with each process/demand combination, as well as the probabilities of each long-term demand level: Poor 0.05 - $250,000 $200,000 - $1,200,000 The EMV for this decision is $ Fair 0.40 $1,200,000 $400,000 - $500,000 Demand Good 0.20 $1,100,000 $650,000 $22,000 Excellent 0.35 $1,400,000 $800,000 $2,100,000 Probability Batch Custom Group technology a) The alternative that provides Zhu the greatest expected monetary value (EMV) is (enter your answer as a whole number). b) The amount that Faye Zhu would be willing to pay for a forecast that would accurately determine the level of demand in the future = $ (enter your answer as a whole number).