Use the following data to answer questions 77-87.
-Refer to the data on Expected Demand for Acme Widgets.For the various demand scenarios and their associated probabilities,which of the three decision alternatives has the maximum expected value?
A)Outsource,with an expected value of $20.95 million
B)Build capacity,with an expected value of $23.70 million
C)Do nothing,with an expected value of $40.50 million
D)Outsource,with an expected value of $31.60 million

Question

Use the following data to answer questions 77-87.  
-Refer to the data on Expected Demand for Acme Widgets.For the various demand scenarios and their associated probabilities,which of the three decision alternatives has the maximum expected value?
A)Outsource,with an expected value of $20.95 million 
B)Build capacity,with an expected value of $23.70 million 
C)Do nothing,with an expected value of $40.50 million 
D)Outsource,with an expected value of $31.60 million

Quizplus · Accepted Answer

The decision with the maximum expected value is the one with the highest expected monetary outcome. In this case, option C, "Do nothing," has the highest expected value of $40.50 million, making it the decision with the maximum expected value.

Use the Following Data to Answer Questions 77-87