The research department at a manufacturing company has developed a new process that it believes will result in an improved product. Management must decide whether to go ahead and market the new product. The new product may or may not be better than the old one. If the new product is better and the company decides to market it, sales should increase by $60,000. If it is not better and they replace the old product with the new product on the market, they will lose $25,000 to competitors. If they decide not to market the new product, they will lose a total of $50,000 if it is better and just research costs of $20,000 if it is not. Answer parts a through c below. (a) Prepare a payoff matrix. Start 2 By 2 Table 1st Row 1st Column 60000 2nd Column negative 25000 2nd Row 1st Column negative 50000 2nd Column negative 20000 EndTable 60000 −25000 −50000 −20000 (Type an integer or decimal for each matrix element. Do not include the $ symbol in your answer.) (b) If management believes there is a probability of 0.4 that the new product is better, find the expected profits under each strategy and determine the best action. Select the correct answer below and fill in the answer boxes to complete your choice. (Type integers or decimals.) A. The expected profits are $nothing if they market the product and $nothing if they do not. They should not market the product because they will earn more if they do not. B. The expected profits are $nothing if they market the product and $nothing if they do not. They should not market the product because they will lose less if they do not. C. The expected profits are $nothing if they market the product and $nothing if they do not. They should market the product because they will earn more if they do so. D. The expected profits are $nothing if they market the product and $nothing if they do not. They should market the product because they will lose less if they do.

The research department at a manufacturing company has developed a new process that it believes will result in an improved product. Management must decide whether to go ahead and market the new product. The new product may or may not be better than the old one. If the new product is better and the company decides to market it, sales should increase by $60,000. If it is not better and they replace the old product with the new product on the market, they will lose $25,000 to competitors. If they decide not to market the new product, they will lose a total of $50,000 if it is better and just research costs of $20,000 if it is not. Answer parts a through c below. (a) Prepare a payoff matrix. Start 2 By 2 Table 1st Row 1st Column 60000 2nd Column negative 25000 2nd Row 1st Column negative 50000 2nd Column negative 20000 EndTable 60000 −25000 −50000 −20000 (Type an integer or decimal for each matrix element. Do not include the $ symbol in your answer.) (b) If management believes there is a probability of 0.4 that the new product is better, find the expected profits under each strategy and determine the best action. Select the correct answer below and fill in the answer boxes to complete your choice. (Type integers or decimals.) A. The expected profits are $nothing if they market the product and $nothing if they do not. They should not market the product because they will earn more if they do not. B. The expected profits are $nothing if they market the product and $nothing if they do not. They should not market the product because they will lose less if they do not. C. The expected profits are $nothing if they market the product and $nothing if they do not. They should market the product because they will earn more if they do so. D. The expected profits are $nothing if they market the product and $nothing if they do not. They should market the product because they will lose less if they do.

Name: The research department at a manufacturing company has developed a new
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Description: The research department at a manufacturing company has developed a new process that it believes will result in an improved product. Management must decide whether to go ahead and market the new product. The new product may or may not be better than t

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$60,000.

If it is not better and they replace the old product with the new product on the market, they will lose

$25,000

to competitors. If they decide not to market the new product, they will lose a total of

$50,000

if it is better and just research costs of

$20,000

if it is not. Answer parts a through c below.

(a) Prepare a payoff matrix.

Start 2 By 2 Table 1st Row 1st Column 60000 2nd Column negative 25000 2nd Row 1st Column negative 50000 2nd Column negative 20000 EndTable

	60000	−25000
−50000	−20000

(Type an integer or decimal for each matrix element. Do not include the $ symbol in your answer.)

(b) If management believes there is a probability of

0.4

that the new product is better, find the expected profits under each strategy and determine the best action. Select the correct answer below and fill in the answer boxes to complete your choice.

(Type integers or decimals.)

The expected profits are

$nothing

if they market the product and

$nothing

if they do not. They should not market the product because they will earn more if they do not.

The expected profits are

$nothing

if they market the product and

$nothing

if they do not. They should not market the product because they will lose less if they do not.

The expected profits are

$nothing

if they market the product and

$nothing

if they do not. They should market the product because they will earn more if they do so.

The expected profits are

$nothing

if they market the product and

$nothing

if they do not. They should market the product because they will lose less if they do.

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