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Problem 1: Expected Value Determine whether you would decide, based on profitability, to go with...

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Problem 1: Expected Value Determine whether you would decide, based on profitability, to go with the product cluster of Product A, Product B, and Product C or the product cluster of Product X, Product Y, and Product Z. Fixed cost for the Products are: Product A = 120,000 Product B 103,000 Product C- 127,000 Product X 128,000 Product Y- 123,000 Product Z 120,000 Product A is expecting revenues of $800,000 and variable costs of $300,000. Product B is expecting revenues of $600,000 and variable costs of $200,000. Product C is expecting revenues of $700,000 and variable costs of $400,000. The probability of achieving these revenues and costs are 38% for Product A and 35% for Product C? Prduct X is expecting revenues of $800,000 and variable costs of $300,000 Product Y is expecting revenues of $600,000 and variable costs of $250,000. Product Z is expecting revenues of $900.000 and variable costs of $300,000. The probability of achieving these revenues and costs are 35% for Product X and 29% for Product Z? Your goal is to maximize profits 1. What is the probable proft of cluster ABC? 2. What is the probable profit of cluster XYZ? 3. Which product cluster would you choose? HTML Editor

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