Create sensitivity graph comparing different alternatives

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Reference no: EM131225131

A company is planning to start a manufacturing unit. The success of the manufacturing unit depends on the ability of the company to obtain patent approval on a product. The company can invest to receive patents from the U.S. government. If the company is successful in its patent application, it can make $60,000. If it doesn't receive the patent, the company will make $5,000. Or the company can fund a caucus for election 2000; if it is accepted then the company can make $50,000, or else it loses $20,000. Or if the company goes for an awareness campaign, it can make $25,000) but if it is not successful, then the return will be only $ 10,000. I l Probability of success is 0.6 and of fåilure is 0.4. Construct an Excel spreadsheet to find the best decision using the following:

a. Maximax

b. Maximin

c. Equal likelihood

d .Expected value

e. Create a sensitivity graph comparing the different alternatives as the probability of success changes.

Reference no: EM131225131

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