Alternatives 1 and 2 in the Following Payoff Table Represent

question 85

Essay

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 weather conditions significantly affect the level of demand.48 monthly sales reports are randomly selected.These monthly sales reports show 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:

Balance Theory

According to Heider, people prefer attitudes that are consistent with each other over those that are inconsistent. A person (P) tries to maintain consistency in attitudes to, and relationships with, other people (O) and elements of the environment (X).

Cognitions

The mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.

Three-Component Model

A model in psychology that views attitude as having cognitive, affective, and behavioral components.

Attitudes

Psychological tendencies expressed by evaluating particular entities with some degree of favor or disfavor, reflecting how individuals think, feel, and are inclined to act.