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

question 76

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,the firm's manager should ______. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$$\text { Demand }$
$\begin{array}{|c|c|c|c|}\hline \text { De cision alternative } & \mathbf{L o w}(20 \%) & \text { Medium (50\%) } & \text { High }(30 \%) \\\hline \begin{array}{c}\text { S ubcontract additional } \\\text { capacity }\end{array} & \$ 7 \text { million } & \$ 40 \text { million } & \$ 70 \text { million } \\\hline \text { Build a new plant } & -\$ 55 \text { million } & \$ 25 \text { million } & \$ 100 \text { million } \\\hline \text { Do nothing } & \$ 15 \text { million } & \$30 \text { million } & \$ 85 \text { million }\\\hline\end{array}$

• A)subcontract additional capacity.
• B)build a new plant.
• C)do nothing.
• D)expand the plant.

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Definitions:

Hostility

An antagonistic attitude or feeling of enmity towards others, often manifesting in aggressive behavior.

Laid Off

The temporary or permanent dismissal of employees from their job due to economic reasons or company restructuring, not because of personal performance.

Employer

An individual or organization that hires and pays people to do work.

Life Satisfaction

A measure of well-being and contentment with one's life overall, reflecting a general sense of happiness and fulfillment.