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Uncertainty associated with the demand volume

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Reference no: EM131528168

Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, while the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years.

                                                    Demand Volume

Decision                                Low          Medium       High

Basic model                        $80,000       $100,000        $150,000

Advanced model                 $40,000       $110,000        $220,000

Given the uncertainty associated with the demand volume, and no other information to work with, how would you make a decision? Explain your reasoning.

Reference no: EM131528168

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