# MacDonald Products, lnc.

by | Jul 27, 2021 | Homework Help

Got the dollar values wrong, i think it’s option b that has the highest, is this true?17. MacDonald Products, lnc., 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 ?rm can expect sales to be 90,000 units at \$620 each, with a probability of 0.24 and a 0.76 probability of 60,000 at \$620. If, however. he uses the value analysis team (option b), the ?rm expects sales of 75,000 units at \$750, with a probability of 0.75 and a 0.25 probability of 70,000 units at \$750. Value engineering, at a cost of\$115,000, is only used in option

b. Which option has the highest expected monetary value (EMV)? The EW for option a is \$ and the EMV for option b is \$ .

Therefore, option (1)  has the highest expected monetary value. (Enter your responses as integers.) (1)OaOb

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