A Company Wants to Add a New Product to Its

Multiple Choice

A company wants to add a new product to its existing line of products.There are two similar candidate products A and B The demand for the new product could be high,medium,or low with probabilities of .25,.5,and .25 respectively.The demand and the corresponding profit for each product is: $$\begin{array} { | l | l | l | l | } \hline & \text { High } & \text { Medium } & \text { Low } \\\hline \text { Product A } & 40,000 & 30,000 & 20,000 \\\hline \text { Product B } & 70,000 & 20,000 & 0 \\\hline\end{array}$$ Based on the expected value criterion,which product should be chosen?

A) Product A
B) Product B
C) Either product since they have the same expected demand.
D) Expected demand cannot be used as a basis of decision.