Suppose a Manufacturing Plant Is Considering Three Options for Expansion

question 85

Essay

Suppose a manufacturing plant is considering three options for expansion. The first one is to expand into a new plant (large), the second to add on third-shift to the daily schedule (medium), and the third to do nothing (small). There are three possibilities for demand. These are high, medium, and low with each having an equal likelihood of occurring. Suppose that the profits for the expansion plans are as follows (respective to high, medium, low demand). The large expansion profits are $40000, $20000, -$30000, the medium expansion choice $30000, $15000, $12000 and the small expansion choice $9000, $6000, $3000. Calculate the EMV of each choice. Which of the expansion plans should the manager choose?

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Definitions:

Adolescents

The transitional stage of physical and psychological development that generally occurs during the period from puberty to legal adulthood (age of majority).

Manic Episodes

Periods of abnormally elevated mood, energy, and activity levels that can affect one's ability to function and are characteristic of bipolar disorder.

Depressive Episodes

Periods characterized by severely depressed mood and a lack of interest in activities, which can significantly impair daily functioning.

Cyclothymia

A mood disorder characterized by periods of hypomanic symptoms followed by periods of mild depression.