A Company Is Planning a Plant Expansion A)007
B)26

question 20

Multiple Choice

A company is planning a plant expansion.They can build a large or small plant.The payoffs for the plant depend on the level of consumer demand for the company's products.The company believes that there is an 69% chance that demand for their products will be high and a 31% chance that it will be low.The company can pay a market research firm to survey consumer attitudes towards the company's products.There is a 63% chance that the customers will like the products and a 37% chance that they won't.The payoff matrix and costs of the two plants are listed below.The company believes that if the survey is favorable there is a 92% chance that demand will be high for the products.If the survey is unfavorable there is only a 30% chance that the demand will be high.The following decision tree has been built for this problem.The company has computed that the expected monetary value of the best decision without sample information is 154.35 million.What is the EVSI for this problem in $ million) ?
$$\begin{array} { l l l l } & \text { Demand } & \\\text { Factory Size }& \text { High } & \text { Low } & \text { Plant Cost \$million) } \\\hline\text { Large } & 200 & 8 & 10 \\&&5\\\text { Small } & 100 & 9&2 \\& & 5 & \end{array}$$

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Definitions:

Q-sort Procedure

A method used to study personality traits, attitudes, or beliefs by sorting statements into categories that reflect how applicable they are to oneself or another.

Successful Experience

An event or series of events that result in a positive outcome, contributing to an individual's sense of achievement and competence.

Therapist

A professional trained to treat emotional, behavioral, and mental disorders, providing support and strategies to help individuals understand and overcome their challenges.

Shaping

In psychology, shaping is a technique used in behavior modification that involves reinforcing behaviors that are progressively closer to the desired behavior.