XYZ Is a Paint Product Manufacturer,and One of the Plants $\quad$

question 37

Multiple Choice

XYZ is a paint product manufacturer,and one of the plants is experiencing a substantial increase in demand.The future demand for the products could be low,medium,or high,with probabilities estimated to be 25%,50%,and 30%,respectively.The company wants to determine the financial impact associated with the three decision alternatives under the varying levels of demand.Given the following payoff matrix,compute the expected value of decisions with perfect information. $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Demand }$

$\begin{array} { | c | c | c | c | } \hline \text { Decision Altemative } & \text { Low(20\%) } & \text { Medium(50\%) } & \text { High (30\%) } \\\hline \begin{array} { c } \text { Subcontract additional } \\\text { capacity }\end{array} & \$ 7 \text { million } & \$ 40 \text { million } & \$ 70 \text { million } \\\hline \text { Build a new plant } & - \$ 55 \text { million } & \$ 25 \text { million } & \$ 100 \text { million } \\\hline\end{array}$

• A)$45.5 M
• B)$53M
• C)$12.4 M
• D)$70 M

---

Definitions:

Divided

Separated into parts or pieces; often used to describe roads or cells that split into two or more pathways or segments.

Lobes

Divisions or sections of an organ separated by fissures, especially in the brain, lungs, and liver.

Lingual Frenulum

A fold of mucous membrane in the midline of the underside of the tongue, connecting the tongue to the floor of the mouth.

Oral Cavity

The mouth, including the lips, teeth, gums, and the initial portion of the alimentary canal, playing a key role in speech, breathing, and digestion.