Barbour Electric Is Considering the Introduction of a New Product

question 25

Essay

Barbour Electric is considering the introduction of a new product.This product can be produced in one of several ways: (a)using the present assembly line at a cost of $25 per unit, (b)using the current assembly line after it has been overhauled (at a cost of $10,000)with a cost of $22 per unit; and (c)on an entirely new assembly line (costing $30,000)designed especially for the new product with a per unit cost of $20.Barbour is worried, however, about the impact of competition.If no competition occurs, they expect to sell 15,000 units the first year.With competition, the number of units sold is expected to drop to 9,000.At the moment, their best estimate is that there is a 40% chance of competition.They have decided to make their decision based on the first year sales.
(a)Develop the decision table (EMV).
(b)Develop a decision table (EOL).
(c)What should they do?

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Definitions:

Neuroleptics

A class of medication primarily used to manage psychosis, including delusions, hallucinations, paranoia, or disordered thought, and are also called antipsychotics.

Side Effects

Unintended and often unwanted reactions that occur in addition to the desired therapeutic effect of a medication or treatment.

Schizophrenia

A long-term mental disorder involving a breakdown in the relation between thought, emotion, and behavior, leading to faulty perception, inappropriate actions, and feelings.

Mental Disorders

Health conditions characterized by alterations in thinking, mood, or behavior associated with distress or impaired functioning.