Question

Consider the two capacity options for Arktec Manufacturing, shown in problem 2. Suppose the company has identified the following three possible demand scenarios:
DEMAND (UNITS PER YEAR) PROBABILITY
25,000.................. 30%
60,000................. 40%
100,000................ 30%
a. What is the expected value of each option? Which option would you choose, based on this information?
b. Suppose the lowest and highest demand levels are updated to 40,000 and 110,000, respectively. Recalculate the expected values. What happened?



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  • CreatedApril 10, 2015
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