Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, while the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Decision Low Medium High Basic Model $75,000 $95,000 $120,000 Advanced Model $60,000 $150,000 $260,000 Given the uncertainty associated with the demand volume and no other information to work with, how would you make a decision? Use the Excel template Decision Analysis and explain your reasoning.
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Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, while the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years.
Decision |
Low |
Medium |
High |
Basic Model |
$75,000 |
$95,000 |
$120,000 |
Advanced Model |
$60,000 |
$150,000 |
$260,000 |
Given the uncertainty associated with the demand volume and no other information to work with, how would you make a decision?
Use the Excel template Decision Analysis and explain your reasoning.
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