Suppose your organization is deciding which of THREE projects to bid on. The information or each is in the Table 2 below. Assume that all up-front investments are not recovered, so the are shown as negative profits. Table 2: Three Projects Details Estimated Probability (P) Profits/Losses Project A 50% RM120,000 50% (RM50,000) Project B 30% RM100,000 40% RM50,000 30% (RM60,000) Project C 70% RM20,000 30% (RM5,000) Tasks: (a) Calculate the Expected Monetary Value (EMV) for each project. Then, insert all the detail: into the table. (b) Based on your result, explain on which projects you would bid. Be sure to use the EMV information and your personal risk tolerance to justify your answer.
Suppose your organization is deciding which of THREE projects to bid on. The information or each is in the Table 2 below. Assume that all up-front investments are not recovered, so the are shown as negative profits. Table 2: Three Projects Details Estimated Probability (P) Profits/Losses Project A 50% RM120,000 50% (RM50,000) Project B 30% RM100,000 40% RM50,000 30% (RM60,000) Project C 70% RM20,000 30% (RM5,000) Tasks: (a) Calculate the Expected Monetary Value (EMV) for each project. Then, insert all the detail: into the table. (b) Based on your result, explain on which projects you would bid. Be sure to use the EMV information and your personal risk tolerance to justify your answer.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 30P
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