Production of new? top-of-the-line stereo

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Reference no: EM132221774

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 85,000 units at ?$500 ?each, with a probability of 0.74 and a 0.26 probability of 80,000 at ?$500. ?If, however, he uses the value analysis team? (option b), the firm expects sales of 75,000 units at ?$760?, with a probability of 0.71 and a 0.29 probability of 60,000 units at ?$760. Value? engineering, 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 a or b has the highest expected monetary value. ?(Enter your responses as integers?.)

Reference no: EM132221774

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