The Alternatives 1 and 2 in the Following Payoff Table

question 56

Essay

The alternatives 1 and 2 in the following payoff table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt.The level of demand affects the success of both strategies.The states of nature (S_I)represent the levels of demand for the company products.S₁,S₂ and S₃ characterize high,medium and low demand respectively.The payoff values are in thousands of dollars. The management believes that the weather conditions significantly affect the level of demand.48 monthly sales reports are randomly selected.These monthly sales reports showed 15 months with high demand,28 months with medium demand,and 5 months with low demand.12 of the 15 months with high demand had favorable weather conditions.14 of the 28 months with medium demand had favorable weather conditions.Only 1 of the 5 months with low demand had favorable weather conditions.
If the weather conditions are poor,determine which manufacturing strategy the company should implement.

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Definitions:

Specific Provisions

Special clauses in a contract or law that are designed to cover particular details and scenarios, differing from general provisions.

Oral Contract

A verbal agreement between parties that is legally binding, provided it meets all requirements of a valid contract.

Reasonable Reliance

Reasonable reliance involves acting based on the expectation that the information or promises provided by another party are accurate and trustworthy.

Interest in Land

Legal rights or investments in real property, including ownership or the right to use the land under certain conditions.