Reference no: EM13574584

The Wilhelms Cola Company plans to market a new pineapple-flavoured cola this summer. The decision is whether to package the cola in returnable or in nonreturnable bottles. Currently, the provincial legislature is considering eliminating nonreturnable bottles. Tybo Wilhelms, president of Withelms Cola Company, has discussed the problem with his government representative and established the probability to be .70 that nonreturnable bottles will be eliminated. The following table shows the estimated monthly profits (in thousands of dollars) if the cola is bottled in returnable versus nonreturnable bottles. Of course, if the law is passed and the decision is to bottle the cola in nonreturnable bottles, all profits would be from out-of-province sales. Compute the expected profit for both bottling decisions. Which decision do you recommend?

Alternative               Law is Passed (S thousands),S1     Law is not Passed (S thousands),S2
Returnable bottle                   $80                                                     $40
taonrensnable bottle              25                                                        60