Suppose a Manufacturing Plant Is Considering Three Options for Expansion

question 54

Essay

Suppose a manufacturing plant is considering three options for expansion. The first one is to expand into a new plant (large), the second to add on third-shift to the daily schedule (medium), and the third to do nothing (small). There are three possibilities for demand. These are high, medium, and low with each having an equal likelihood of occurring. Suppose that the profits for the expansion plans are as follows (respective to high, medium, low demand). The large expansion profits are $100000, $10000, -$10000, the medium expansion choice $40000, $40000, $5000 and the small expansion choice $15000, $15000, $15000. Calculate the EMV of each choice. Which of the expansion plans should the manager choose?

---

Definitions:

Incompetence

The inability of a structure, such as a valve within the body, to perform its function properly, often leading to the leakage or backflow of blood.

Lower Back

The lumbar region of the spine that supports much of the body's weight and is often a common area for pain.

Gastrocnemius

A significant muscle in the calf that plays a crucial role in the activities of walking, running, and jumping, aiding in the motion of both the ankle and the knee.

Heavy Weight

Refers to objects of a substantial mass, often used in the context of lifting weights in exercise or strength training.