MacDonald Products, Inc., of Clarkson, New York, has the option of ( a) proceeding immediately with production of a new top- of- the- line stereo TV that has just completed prototype testing or ( b) having the value analysis team complete a study. If Ed Lusk, VP for operations, proceeds with the existing prototype ( option a), the firm can expect sales to be 100,000 units at $ 550 each, with a probability of .6, and a .4 probability of 75,000 at $ 550. If, however, he uses the value analysis team ( option b), the firm expects sales of 75,000 units at $ 750, with a probability of .7, and a .3 probability of 70,000 units at $ 750. Value analysis, at a cost of $ 100,000, is only used in option b. Which option has the highest expected monetary value ( EMV)?
Answer to relevant QuestionsRitz Products’s materials manager, Tej Dhakar, must determine whether to make or buy a new semiconductor for the wrist TV that the firm is about to produce. One million units are expected to be produced over the life ...Explain sustainability.Using the information in Problem S5.1, which design alternative is the better environmental choice if the Brew House decided to remove the timer from the Brew Master model?Explain how improving quality can lead to reduced costs.Linda Boardman, Inc., an equipment manufacturer in Boston, has submitted a sample cutoff valve to improve your manufacturing process. Your process engineering department has con-ducted experiments and found that the valve ...
Post your question