Question: Gamma Industries is evaluating two different manufacturing systems (Alpha and Beta): Possible Outcome Probability Rate of Return Alpha System Rate of Return Beta System Optimistic

Gamma Industries is evaluating two different manufacturing systems (Alpha and Beta):

Possible Outcome

Probability

Rate of Return

Alpha System

Rate of Return

Beta System

Optimistic

.25

.40

.20

Most likely

.50

.20

.30

Pessimistic

.25

(.10)

(.20)

Which manufacturing system provides the lowest expected return?

  1. Alpha System
  2. Beta System
  3. Not enough information

With calculations

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