Section A.

Develop Thoroughly
Good Market Reaction- .4 ($500,000)= $200,000
Moderate Market Reaction- .4 ($25,000) = $10,000
Poor Market Reaction - .2 ($1,000) = $200

.4 ($500,000) + .4 ($25,000) + .2 ($1,000) = $210,200 Expected Value

Develop Rapidly
Good Market Reaction- .1 ($500,000) = $50,000
Moderate Market Reaction- .2 ($25,000) =$5,000
Poor Market Reaction- .7 ($1,000) = $700

.1 ($500,000) + .2 ($25,000) + .7 ($1000) = $55,700 Expected Value

Consolidate Existing Product
Good Market Reaction- .3 ($200,000) = $60,000
Moderate Market Reaction- .4 ($10,000) = $4000
Poor Market Reaction-.3 ($3,000) = $900.00

.3 ($200,000) + .4 ($10,000) + .3 ($3000) = $64,900 Expected Value

Reap Without Investing
Good Market Reaction- N/A. This category does not exist on the graph. This means that there is no ideal outcome or maximization of product for this company if they only continue to gain profits from current products made without any action. This immediately takes this alternative out of the running for the best option available. The fact that there is no good reaction from any kind from the market immediately suggests beyond graphs that a change should be made as well.

Moderate Market Reaction- .6 ($10,000) = $6,000
Poor Market Reaction- .4 ($1,000) = $400
.6 ($10,000) + .4 ($1000) =$6,400 Expected Value

Section B. Comparison and Most Appropriate Decision Alternative From the formulas I’ve worked through above, it would be my professional decision to recommend that the company take the risk and invest in thoroughly developing a new product line. The outcome of this decision far outweighs any other on the chart after extensive evaluation. The second in line for profit is consolidating the existing line they already have, but in comparison to rapid development, the profits are not that much greater. And both of these options pale in