Explain which level of output should be chosen

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Reference no: EM1357361

Star Products, Inc. Faces uncertain demand conditions in 2009. Management at Star Products is considering three different levels of output for 2009: 1, 1.5, or 2 million units. Profit (in millions) if demand is weak = 60,50,-50, and if demand is strong = 175,200, 400. Now suppose that management believes the probability of weak demand in 2009 is 25% and the probability of strong demand is 75%. Using mean-variance analysis, which level of output should be chosen?

Reference no: EM1357361

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