An Operations Manager's Staff Has Compiled the Information Below for Four

question 10

Essay

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.
$$\begin{array} { | c | c | c | c | c | } \hline & { \text { States of Nature } } \\\hline & 1 & 2 & 3 & 4 \\\hline \text { Alternative E } & 50 & 50 & 70 & 60 \\\hline \text { Alternative } \mathrm { F } & 30 & 50 & 80 & 130 \\\hline \text { Alternative G } & 70 & 80 & 70 & 60 \\\hline \text { Alternative } \mathrm { H } & - 140 & - 10 & 150 & 220 \\\hline\end{array}$$
Using the criterion of expected monetary value, which production alternative should be chosen?

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Definitions:

Processor Module

A processor module refers to a self-contained unit within a computer or embedded system that contains a processor and other necessary components for processing data.

Status Indicators

"LEDs that indicate the on-off status of an input or output point and are visible on the outside of the PLC."

Output Module

A hardware component in a PLC that provides the interface and electrical signal conversion to control output devices.