An operations manager's staff has compiled the information below for four manufacturing alternatives (E, F, G, and H) that vary by production technology and the capacity of the machinery. All choices enable the same level of total production and have the same lifetime. The four states of nature represent four levels of consumer acceptance of the firm's products. Values in the table are net present value of future profits in millions of dollars. Forecasts indicate that there is a 0.1 probability of acceptance level 1, 0.2 chance of acceptance level 2, 0.4 chance of acceptance level 3, and 0.3 change of acceptance level 4.
Using the criterion of expected monetary value, which production alternative should be chosen?
Definitions:
Responsive
Reacting quickly and positively to changes or needs.
Happy Hour
A promotional event typically held in bars and restaurants offering discounted prices on drinks and sometimes food during specific hours.
Market Competitiveness
A measure of a company's ability to compete in a particular market based on factors such as price, product quality, and customer service.
Market Growth Potential
The capacity for expansion or increased sales within a market, considering current trends and consumer demand.
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