A firm is considering a product launch. It will do so if the expected total revenue is in excess of K1000. It decides to set the price at K10. Different levels of sales are predicted with probabilities of: 80 units with 0.15 probability; 100 units with 0.50 and 120 units with 0.35. Should the firm go ahead and launch the product?

A firm is considering a product launch. It will do so if the expected total revenue is in excess of K1000. It decides to set the price at K10. Different levels of sales are predicted with probabilities of: 80 units with 0.15 probability; 100 units with 0.50 and 120 units with 0.35. Should the firm go ahead and launch the product?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.3: Single-stage Decision Problems

Problem 5P

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A firm is considering a product launch. It will do so if the expected total revenue is in excess of K1000. It decides to set the price at K10. Different levels of sales are predicted with probabilities of: 80 units with 0.15 probability; 100 units with 0.50 and 120 units with 0.35. Should the firm go ahead and launch the product?
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