Techware Incorporated is considering the introduction of two new software products to the market. The company has four options regarding these products: introduce neither product, introduce product 1 only, introduce product 2 only, or introduce both products. Research and development costs for products 1 and 2 are $180,000 and $150,000, respectively. Note that the first option entails no costs because research and development efforts have not yet begun. The success of these software products depends on the national economy in the coming year. The company's revenues, depending on its decision and the state of the economy, are given in the file P09_33.xlsx. The probabilities of a strong, fair, or weak economy in the coming year are assessed to be 0.10, 0.60, and 0.30, respectively. Use PrecisionTree to identify the strategy that maximizes Techware's expected net revenue. Techware's optimal decision is to introduce product 2 only . By following this strategy, Techware can expect to earn how much money in net revenue? Trend in national economy Strong Fair Weak Decisions Introduce neither product $0 $0 $0 Introduce Product 1 only $500,000 $260,000 $120,000 Introduce Product 2 only $420,000 $230,000 $110,000 Introduce both products $820,000 $390,000 $200,000

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

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Techware Incorporated is considering the introduction of two new software products to the market. The company has four options regarding these products: introduce neither product, introduce product 1 only, introduce product 2 only, or introduce both products. Research and development costs for products 1 and 2 are $180,000 and $150,000, respectively. Note that the first option entails no costs because research and development efforts have not yet begun. The success of these software products depends on the national economy in the coming year. The company's revenues, depending on its decision and the state of the economy, are given in the file P09_33.xlsx. The probabilities of a strong, fair, or weak economy in the coming year are assessed to be 0.10, 0.60, and 0.30, respectively.

Use PrecisionTree to identify the strategy that maximizes Techware's expected net revenue.

Techware's optimal decision is to introduce product 2 only . By following this strategy, Techware can expect to earn how much money in net revenue?

		Trend in national economy
		Strong	Fair	Weak
Decisions	Introduce neither product	$0	$0	$0
	Introduce Product 1 only	$500,000	$260,000	$120,000
	Introduce Product 2 only	$420,000	$230,000	$110,000
	Introduce both products	$820,000	$390,000	$200,000

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