MacDonald Products, Inc., of Clarkson, New York, 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 $600 each, with a probability of 0.51 and a 0.49 probability of 80,000 at $600. If, however, he uses the value analysis team (option b), the firm expects sales of 80,000 units at $710, with a probability of 0.61 and a 0.39 probability of 65,000 units at $710. Value engineering, at a cost of $115,000, 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 bis S. Therefore, option monetary value. (Enter your responses as integers.) has the highest expected
MacDonald Products, Inc., of Clarkson, New York, 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 $600 each, with a probability of 0.51 and a 0.49 probability of 80,000 at $600. If, however, he uses the value analysis team (option b), the firm expects sales of 80,000 units at $710, with a probability of 0.61 and a 0.39 probability of 65,000 units at $710. Value engineering, at a cost of $115,000, 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 bis S. Therefore, option monetary value. (Enter your responses as integers.) has the highest expected
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.4SA
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