Question

APC Industries has been growing and having difficulty meeting the demand for its products recently. So, the firm is considering three options to address this issue: It can move to a larger facility, add a second shift, or hire a subcontractor to produce the company’s products. The annual payoff of each option depends if the demand continues to expand, holds steady, or declines. The expected payoff for each combination is shown in the following table:
a. Choose the best option for APC Industries using decision making under risk.
b. What is the most that APC Industries would be willing to pay for additional information?


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  • CreatedJuly 29, 2015
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