Zhu Manufacturing is considering the introduction of a family of new products. Long-term demand for the product group custom manufacturing. Or she can invest in group technology. Zhu won't be able to forecast demand accurately until after she makes the process choice. Demand will be classified into four compartments: poor, fair, good, and excellent. The table below indicates the payoffs (profits associated with each process/demand combination, as well as the probabilities of each long-term demand level.
| Demand | Fair | Good | Poor | Excellent |
|----------|--------|--------|--------|-------------|
| Probability | 0.45 | 0.25 | 0.05 | 0.25 |
| Batch | -$200,000 | $800,000 | $1,400,000 | $1,200,000 |
| Custom | $250,000 | $750,000 | -$600,000 | $22,000 |
| Group technology | - | - | $200,000 | $1,000,000 |
a. The alternative that provides Zhu the greatest expected monetary value (EMV) is:
The EMV for this decision is [enter your answer as a whole number].
b. The amount that Faye Zhu would be willing to pay for a forecast that would accurately determine the level of demand in the future is:
[enter your answer as a whole number].