(Solved): A toy manufacturer makes stuffed kittens and puppies that have relatively lifelike motions. There ...

A toy manufacturer makes stuffed kittens and puppies that have relatively lifelike motions. There are three different mechanisms which can be installed in these "pets." These toys will sell for the same price regardless of the mechanism installed, but each mechanism has its own variable cost and setup cost. The total investment cost for the Wind-Up action is $$\$45,000$$; The investment cost for the Pneumatic is $$\$55,000$$. The investment cost for the Electronic action is $$\$73,500$$. Profit, therefore, is dependent upon the choice of mechanism and upon the level of demand and cost The manufacturer has in hand a forecast of demand that suggests a $$0.2$$ probability of light demand, a $$0.45$$ probability of moderate demand, and a probability of $$0.35$$ of heavy demand. Payoffs (profits) for each mechanism-demand combination appear in the table below. a. What is the EMV for the Wind Up option? b. What is the EMV for the Pneumatic option? c. What is the EMV for the Electronic option? d. Based on EMV what choice should be made?