Trey Leeman,Operations Manager at National Consumers,Inc

question 66

Multiple Choice

Trey Leeman,Operations Manager at National Consumers,Inc.(NCI) ,is evaluating alternatives for increasing capacity at NCI's Fountain Hill plant.He has identified four alternatives,and has constructed the following payoff table which shows payoffs (in $1,000,000's) for the three possible levels of market demand. If Trey uses the Hurwicz criterion with alpha = 0.1,the appropriate alternative would be: _____________.

• A) Lease New Equipment
• B) Purchase New Equipment
• C) Add Third Shift
• D) Do Nothing
• E) Do everything

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Definitions:

Book Value

The net value of a company's assets and liabilities as recorded on the balance sheet, often compared to market value.

Fixed Asset

Long-term tangible property owned by a business, intended for use in the production of income and not quickly converted into cash.

Plant Asset

Long-term tangible assets used in the operations of a business that are not intended for sale.

Disposal

The act of getting rid of an asset through sale, exchange, retirement, or destruction.