A company manufacturer goods for a market in which the technology of the product is changing rapidly. The research and development department has produced a new product which appears to have potential for commercial exploitation. A further $ 60,000 is required for development testing. The Company has 100 customers and each customer might purchase at the most one unit of the product. Market research suggest that a selling price of $ 6,000 for each unit with total variable costs of manufacturing and selling estimate are $ 2,000 for each unit. From previous experience, it has been possible to derive a probability distribution relation to the proportion of customer who will buy the product as follows Proportion ofcustomer: 0.04 0.08 0.12 016 0.20 Probability: 0.10 0.10 0.20 0.40 0.20 Determine the expected opportunity losses, given no other information than that stated above, and state whether or not the company should develop the production EOL S1=Rs 9,600 and EOL S2= $5,600. Since the company seeks to minimize the expected opportunity loss, the company should select course of action S2 (do not develop the product) with minimum
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