East West Distributing Is in the Process of Trying to Determine

question 44

Essay

East West Distributing is in the process of trying to determine where they should schedule next year's production of a popular line of kitchen utensils that they distribute.Manufacturers in four different countries have submitted bids to East West.However,a pending trade bill in Congress will greatly affect the cost to East West due to proposed tariffs,favorable trading status,etc.
After careful analysis,East West has determined the following cost breakdown for the four manufacturers (in $1,000's)based on whether or not the trade bill passes: $\begin{array}{c|cc}&\text{Bill Passes}&\text{Bill Fails}\\\hline\text { Country A } & 260 & 210 \\\text { Country B } & 320 & 160 \\\text { Country C } & 240 & 240 \\\text { Country D } & 275 & 210\end{array}$
a.If East West estimates that there is a 40% chance of the bill passing, which country should they choose for manufacturing?
b.Over what range of values for the "bill passing" will the solution in part (a) remain optimal?

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Definitions:

Congruent

In harmony or agreement; matching in character or kind.

Base-Rate Information

Pallid, factual, statistical information about an entire class of events.

Paired Distinctiveness

Illusory correlation in which items are seen as belonging together because they share some unusual feature.

Availability Heuristic

A cognitive short-cut in which the frequency or likelihood of an event is based on how quickly instances or associations come to mind.