1. Run the analysis multiple times using the suggestions provided by the board members. Use image below for reference.

"Well, I'll start," said John, one of the older board members. "This new product mumbo jumbo doesn't make sense to me. But I vehemently disagree with your numbers for the current product. Yes, there are health concerns, but they are being blown out of proportion by those hippies. It's way too high at 30%. It needs to go down." He looked at a sheet in front of him. "Yes, that's more reasonable: a 20% chance of an out-and-out ban, all other assumptions saying the same."

"Yeah, and even if there were a ban, the current product still has value. We can sell it in other countries that have more favourable 'regulations'. Even with a ban, it must be worth $300,000 at least," added Pete, a close friend of John's. "With a banned value of $300,000 plus John's belief in the smaller chance of a ban, surely we're better off with the current product.".

Marla cleared her throat, "You both have a better handle on the current product, but as I've been working on the new product, I'd like us to be more conservative with our estimates. I can live with Pete's valuation of the current product, if banned, at $300,000. I can also live with John's belief that there is only a 20% probability of the current product being banned. But the value of the new product based on different sales conditions seems a bit high. They should all be reduced by $100,000 just to play it safe. Hmmm ... I also think the probability of high sales is very optimistic. We should lower it to 50% regardless of whether there is a delay or not. I would rather we err on the side of caution."

Steve piped up, "I agree with everything said so far, except on the overly optimistic chance of a delay for the new product. I think your probabilities about a delay are backwards, Monte. Let's be realistic. With a new product, we know that a delay is likely. It should be a 60% chance of a delay. So, let's go with John's 20% probability of a ban; Steve's valuation of the current product being worth $300,000, if banned; and Marla's two suggestions of 50% probability of high sales and reduction in value of the new product by $100,000. But let's change the probability of a new product delay to 60%.

Monte made notes on what was said. He ran different analyses based on each individual suggestion and a combination of suggestions. After a few moments, he let out a sigh of relief, "If we make all of your changes, the evidence still looks like it favours going with the new product. Let me explain."

2 John's suggestion Best decision Decision methods New Product Current product UI A Maximax 6 Maximin Expected monetary value 8 Coefficient of variation 9 Return to risk ratio 10 11 12 Pete's suggestion 13 14 Decision methods New Product Current product Best decision 15 Maximax 16 Maximin 17 Expected monetary value 18 Coefficient of variation 19 Return to risk ratio 20 21 22 Marla's suggestion 23 24 Decision methods New Product Current product Best decision 25 Maximax 26 Maximin 27 Expected monetary value 28 Coefficient of variation 29 Return to risk ratio 30 31 32 Steve's suggestion 33 34 Decision methods New Product Current product Best decision 35 Maximax 36 MaximinF G H K Additional analysis #1 A W N Values chosen Decision methods New Product Current product Best decision 5 Probability of a ban Maximax 6 Probability of a delay, Maximin Do Probability of high sales (delay) Expected monetary value 8 Probabilty of high sales (no delay) Coefficient of variation 9 Plus or minus adjustment to payoff of new product Return to risk ratio 10 11 12 Additional analysis #2 13 14 Values chosen Decision methods New Product Current product Best decision 15 Probability of a ban Maximax + 16 Probability of a delay, Maximin 17 Probability of high sales (delay) Expected monetary value 18 Probabilty of high sales (no delay) Coefficient of variation 19 Plus or minus adjustment to payoff of new product Return to risk ratio 20 21 22 Additional analysis #3 23 24 Values chosen Decision methods New Product Current product Best decision 25 Probability of a ban Maximax 26 Probability of a delay, Maximin 27 Probability of high sales (delay) Expected monetary value 28 Probabilty of high sales (no delay) Coefficient of variation 29 Plus or minus adjustment to payoff of new product Return to risk ratio 30 31 32 Additional analysis #4 33 34 Values chosen Decision methods New Product Current product Best decision 35 Probability of a ban Maximax 36 Probability of a delay, Maximin 37 Prohahility of high calac (dolav) Evnacted monotan valilo + = jab 1 Payoff & Probability Tab 2 Montes Analysis Tab 3 Additional Analyses Interactive - Spreadsheet Work for Interactive - +