ABC Products, Inc. has the option of (a) proceeding immediately with the production of new plasma TV that has just completed prototype testing or (b) having the value analysis team complete a study which will cost $297000. Under option (a) ABC estimates that with a probability of 0.6 sales will be 10100 units when the per unit profit margin is $4.6, and that with a probability of 0.4 sales will be 6000 when the per unit profit margin is $7.2. Under option (b), ABC estimates that with a probability of 0.2 sales will be 13400 units when per unit profit margin is $2, and that with a probability of 0.8 sales will be 8300 units when the per unit profit margin is $5.9. The structure of the decision problem portrayed as a decision tree is given below. What is the highest expected monetary value? Specify only the amount, e.g. 42055000 Answer:

ABC Products, Inc. has the option of (a) proceeding immediately with the production of new plasma TV that has just completed prototype testing or (b) having the value analysis team complete a study which will cost $297000. Under option (a) ABC estimates that with a probability of 0.6 sales will be 10100 units when the per unit profit margin is $4.6, and that with a probability of 0.4 sales will be 6000 when the per unit profit margin is $7.2. Under option (b), ABC estimates that with a probability of 0.2 sales will be 13400 units when per unit profit margin is $2, and that with a probability of 0.8 sales will be 8300 units when the per unit profit margin is $5.9. The structure of the decision problem portrayed as a decision tree is given below. What is the highest expected monetary value? Specify only the amount, e.g. 42055000 Answer:

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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