The Gorman Manufacturing Company must decide whether to purchase a component part from a supplier or to manufacture the component at its own plant. If demand is high, it would be to Gorman's advantage to manufacture the component. If demand is low, however, Gorman's unit manufacturing cost will be high because of underutilization of equipment. The projected profit in thousands of dollars for Gorman's make-or-buy decision is as follows:

The states of nature have these probabilities: P (low demand) = .35, P (medium demand) = .35, and P (high demand) = .30. Use a decision tree to recommend a decision.

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Demand Low Medium Decision Manufacture component $220 $40 Purchase component High $100 70 210 45