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Unformatted text preview: t also a 75 % probability that a recall would hurt sales by $1.25 million.
In the event that Gerber waits for the CSPC report before taking action. With a favorable
report and a delayed response, there is a 25% chance that sales would remain ﬂat, along with a
75% chance that sales would decline by $2 million. The worst-case scenario is if Gerber remains
passive and there is a recall. In that case, there is still a 20 % probability that Gerber could
increase sales by $.5 million. However, it was considered an 80% probability that signiﬁcant 4 volume would be lost ($10 million).
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This note was uploaded on 03/18/2014 for the course MGMT 15.053 taught by Professor Jamesorli during the Spring '07 term at MIT.
- Spring '07