Which option has the highest expected monetary value


Problem 5E Wendy Products, Inc., of Nashville, Tennessee, 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 Zachary Henson, VP for operations proceeds with the e $600 each, with a probability of .7, and a .3 probability of 78,000 at $500. If, however, he uses the value analysis team (option b), the firm expects sales of 78,000 units at S720, with a probability of .6, and a 4 probability of 60,000 units at $ 800. Value analysis, at a cost of $100,000, is only used in option b. Which option has the highest expected monetary value (EMV)?

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Operation Management: Which option has the highest expected monetary value
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