Howard Weiss, Inc., is considering building a sensitive new airport scanning dev

Question

Howard Weiss, Inc., is considering building a sensitive new airport scanning device.His managers believe that there is a probability of 0.40 that the ATR Co. will come out with a competitive product. It Weiss adds an assembly line for the product and ATR Co. does not follow with a competitive product, Weiss's expected profit is $40,000; if Weiss adds an assembly line and ATR follows suit, Weiss still expects $15,000 profit. If Weiss adds a new plant addition and ATR does not produce a competitive product, Weiss expects a profit of $600,000; if ATR does not compete for this market, Weiss expects a loss of $80,000.

a) Expected value for the Add Assembly Line option = $________

Explanation / Answer

Expected value for the assembly line:

0.6*40000+0.4*15000= 30000$

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