Dawson Electronics is a manufacturer of high-tech control modules for lawn sprinkler systems. Denise, the CEO, is trying to decide if the company should develop one of the two potential new products, the Water Saver 1000 or the Greener Grass 5000. With each product, Dawson can capture a bigger market share if it chooses to expand capacity by buying additional machines. Given different demand scenarios, their probabilities of occurrence, and capacity expansion versus no change in capacity, the potential sales of each product are summarized in Table

a. What is the expected payoff for Water Saver 1000 and the Greener Grass 5000, with and without capacity expansion?
b. Which product should Denise choose to produce, and with which capacity expansionoption?

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DEMAND AND SALES INFORMATION ! FOR DAWSON ELECTRONICS Water Saver 1000 Greener Grass 5000 Probability of Dolfar Sales ($1000) Doliar Sales $100) Occurrence With Capacity Expansion 0.25 Low Demand 1000 2500 3000 Medium Demand 2000 050 5000 High Demand 3000 0.25 Without Capacity Expansion 700 1000 0.25 Demand 1000 Mecium Demand 2000 0.50 High Demand 2000 3000 0.25