Homework:Homework 2 (Module A)

Question 3, Problem A.9

Part 2 of 3

HW Score: 60%, 12 of 20 points

Points: 0 of 3

Question content area

Part 1

Zhu Manufacturing is considering the introduction of a family of new products. Long-term demand for the product group

is somewhat predictable, so the manufacturer must be concerned with the risk of choosing a process that is inappropriate. Faye Zhu is VP of operations. She can choose among batch manufacturing or custom manufacturing, or she can invest in group technology. Zhu won't be able to forecast demand accurately until after she makes the process choice. Demand will be classified into four compartments: poor, fair, good, and excellent. The table below indicates the payoffs (profits) associated with each process/demand combination, as well as the probabilities of each long-term demand level:

Demand

Poor

Fair

Good

Excellent

Probability

Part 2

a) The alternative that provides Zhu the greatest expected monetary value (EMVLOADING...) is

Batch

.

Part 3

The EMV for this decision is $

enter your response here

(enter your answer as a whole number).

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