mework

Question $4,$ Problem $5\mathrm{.}12$

HW Score: $17\mathrm{.}6\%,4\mathrm{.}4$ of $25$

$($similar to$)$

points

Points: $0$ of $3$

Tremblay Products, Inc., of Quebec City, has the option of $($a$)$ proceeding immediately with production of a new top$-$of$-$the$-$line stereo TV that has just completed prototype testing or $($b$)$ having the value analysis team complete a study. If Ed Lusk, VP for operations, proceeds with the existing prototype $($option a$),$ the firm can expect sales to be $110,000$ units at $$570$ each, with a probability of $0\mathrm{.}78$ and a $0\mathrm{.}22$ probability of $70,000$ at $$570.$ If$,$ however, he uses the value analysis team $($option b$),$ the firm expects sales of $85,000$ units at $$700,$ with a probability of $0\mathrm{.}73$ and a $0\mathrm{.}27$ probability of $70,000$ units at $$700.$ Value analysis, at a cost of $$120,000,$ is only used in option $b.$ Which option has the highest expected monetary value $($EMV$)?$

The EMV for option $a$ is $ and the EMV for option $b$ is $$.$ Therefore, option has the highest expected monetary value. $($Enter your responses as integers.$)$