If Acme company (HW_04.xlsx) makes the following changes from our demonstrated example in its bid: 

1) change the fixed cost to $8000; 

2) change probabilities of Great, Fair and Awful to 0.55, 0.30, and 0.15 respectively; 

3) the unit margin is $15.

Please reconsider that 1) whether Acme company should market the new product or abandon it, and 2) perform the sensitivity analysis if all sales volumes are decreased by 5%, 10%, 15%, and 20%. 

 

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Acme single-stage new product decision Decision 1: Continue development and market the new product Fixed cost % decrease in all sales volumes 0% $8,000 EMV for decision 1 Unit margin $15 sensitivity analysis to percentage decrease in all sales volumes %decrease Probability Sales volume Net revenue EMV for decision 1 Market 0.55 600 Great 5% 0.30 300 Fair 10% Awful 0.15 90 15% EMV 20% Decision 2: Stop development and abandon product No payoffs, no costs, no uncertainty EMV Acme single-stage new product decision Decision 1: Continue development and market the new product Fixed cost % decrease in all sales volumes 0% $8,000 EMV for decision 1 Unit margin $15 sensitivity analysis to percentage decrease in all sales volumes %decrease Probability Sales volume Net revenue EMV for decision 1 Market 0.55 600 Great 5% 0.30 300 Fair 10% Awful 0.15 90 15% EMV 20% Decision 2: Stop development and abandon product No payoffs, no costs, no uncertainty EMV

Answer rating: 100% (QA)

The Acme Company is trying to decide whether to market a new product As in many newproduct situations there is considerable uncertainty about whether the new product will eventually be popular Acme be... View the full answer