"In evaluating a recently implemented positioning strategy, a company s marketing department notes that since the strategy was p
1 answer:
You might be interested in
Given the table below describing the total and marginal benefit Elvis
gets from fried peanut butter and banana sandwiches.
![\begin{tabular} {|p {3.5cm}|p {2.0cm}|p {2.6cm}|} \multicolumn {3} {|c|} {Elvis' Fried Peanut Butter and Banana Sandwich Benefit}\\[2ex] Fried PBB Sandwiches&Total Benefit (dollars)&Marginal Benefit (dollars)\\[1ex] 1&&42\\ 2&&24\\ 3&75&\\ 4&81&\\ 5&&-3 \end{tabular}](https://tex.z-dn.net/?f=%5Cbegin%7Btabular%7D%0A%7B%7Cp%20%7B3.5cm%7D%7Cp%20%7B2.0cm%7D%7Cp%20%7B2.6cm%7D%7C%7D%0A%5Cmulticolumn%20%7B3%7D%20%7B%7Cc%7C%7D%20%7BElvis%27%20Fried%20Peanut%20Butter%20and%20Banana%20Sandwich%20Benefit%7D%5C%5C%5B2ex%5D%0AFried%20PBB%20Sandwiches%26Total%20Benefit%20%28dollars%29%26Marginal%20Benefit%20%28dollars%29%5C%5C%5B1ex%5D%0A1%26%2642%5C%5C%0A2%26%2624%5C%5C%0A3%2675%26%5C%5C%20%09%0A4%2681%26%5C%5C%20%09%0A5%26%26-3%0A%5Cend%7Btabular%7D)
<span>The marginal benefit of the 4th fried peanut butter and banana sandwich is given by $81 - $75 = $6.</span>
<span>The marginal benefit of the 4th fried peanut butter and banana sandwich is given by $81 - $75 = $6.</span>
Answer:
The best choice is process A since it has the highest EMV of $330000
Explanation:
there is a 50% chance that they will sell 50,000 units, and a 50% chance that they will sell 100,000 units
The decision tree is attached below, the calculations for the decision tree is given as:
The item sells for $10. Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost.
If there is high demand, they will sell 100,000 units, The profit = 100000($10-$4) - $120000 = $480000.
If there is low demand, they will sell 50,000 units, The profit = 50000($10-$4) - $120000 = $180000.
The EMV of process A = 0.5($480000) + 0.5($180000) = $330000
Process B requires only a $100,000 investment, but its per unit cost is $5
If there is high demand, they will sell 100,000 units, The profit = 100000($10-$5) - $100000 = $400000.
If there is low demand, they will sell 50,000 units, The profit = 50000($10-$5) - $100000 = $150000.
The EMV of process B = 0.5($400000) + 0.5($150000) = $275000
If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier
If there is high demand, they will sell 100,000 units, The profit = 100000($10-$6) = $400000.
If there is low demand, they will sell 50,000 units, The profit = 50000($10-$6) = $200000.
The EMV of Buying = 0.5($400000) + 0.5($200000) = $300000
The best choice is process A since it has the highest EMV
