A Company Is Planning a Plant Expansion

question 43

Short Answer

A company is planning a plant expansion. They can build a large or small plant. The payoffs for the plant depend on the level of consumer demand for the company's products. The company believes that there is an 72% chance that demand for their products will be high and a 28% chance that it will be low. The company can pay a market research firm to survey consumer attitudes towards the company's products. There is a 76% chance that the customers will like the products and a 24% chance that they won't. The payoff matrix and costs of the two plants are listed below. The company believes that if the survey is favorable there is an 87% chance that demand will be high for the products. If the survey is unfavorable there is only a 25% chance that the demand will be high. The company has developed the following conditional probability table for their decision problem.

-Refer to Exhibit 14.11. What is P(), where F = favorable response and H = high demand?

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Definitions:

Criticize

To express disapproval of someone or something based on perceived mistakes or faults.

Disagreements

Instances of divergence in opinions, beliefs, or interests between individuals or groups.

Self-Awareness

The conscious knowledge of one's own character, feelings, motives, and desires.

Interpersonal Conflict

A situation where two or more individuals have opposing interests, beliefs, or needs that result in tension or disagreement.