ch4?5

Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. A forecasting study determines that he probabilities of demand volume are Low =0.4, Medium =0.2, and High =0.4. Using the techniques on deeision analysis, determine the expected value decision. Round your answers to the nearest dollar. Expected profit for the basic model: $ Expected profit for the advanced model: 5