Based on the EV analysis the most profitable option is to continue to offer the existing drug with modifications in both favorable and unfavorable markets.
- Based on the EV analysis the most profitable option is to continue to offer the existing drug with modifications in both favorable and unfavorable markets.
Calculate the Expected Value of each node. | ||
1- New Drug | ||
Payoff | Probability | |
Favorable | $2,686.45 | 69% |
Unfavorable | $880.75 | 31% |
Calculation for Expected Value (EV) | ||
Probabillity | $2,126.68 | |
2 – Exisiting Drug | ||
Payoff | Probability | |
Favorable | $4,294.29 | 61% |
Unfavorable | $1,471.47 | 39% |
Calculation for Expected Value (EV) | ||
$3,193.39 | ||
3 – Make No Changes | ||
Payoff | Probability | |
Favorable | $571.59 | 77% |
Unfavorable | $224.46 | 23% |
Calculation for Expected Value (EV) | ||