ABC Operates a Factory in the United Kingdom $\quad$ $\quad$

question 29

Multiple Choice

ABC operates a factory in the United Kingdom.Because the company's existing factory doesn't have the capacity to meet the future demands,it is considering various options.Consider the payoff matrix that shows the payoff for each combination of decision and state of nature.Determine the best alternative using the maximax criterion. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { State of Nature }$
$\begin{array}{|c|c|c|}\hline \text { Decision Alte rnatiye } & \text { Low Demand } & \text { High Demand } \\\hline \text { Expand current facility } & \$ 4 \text { million } & \$ 5 \text { million } \\\hline \text { Build small factory } & \$ 3 \text { million } & \$ 5.5 \text { million } \\\hline \text { Build large factory } & -\$ 4 \text { million } & \$ 10 \text { million } \\\hline\end{array}$

• A)Expand current facility.
• B)Build small factory.
• C)Build large factory.
• D)Determine a new alternative.

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