If Suntrek, in Problem 34, wants to hire a supply chain analyst to help it determine more accurately what future logistics costs will be, what is the maximum amount they should pay the analyst?
In Problem 34
Suntrek in Problem 33 estimates that the probabilities of future changes in global logistics costs are 0.09 that they will decrease, 0.27 that they will remain the same, and 0.64 that they will increase. Determine the best supplier for the company using expected value.
In Problem 33
Suntrek, a global apparel company, is adding a new supplier for denim fabric that it uses to manufacture denim jeans, and the suppliers it's considering are located near the ports of Shanghai, Mumbai, Manila, Santos, and Veracruz. A major factor in the company's decision is transportation and shipping costs, which are dependent on several factors including port traffic, container costs, and future oil prices. The following payoff table summarizes the total monthly shipping costs (in $100,000s) for the suppliers in each of the ports, given the future state of related logistics costs.

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Logistics Costs Port Decrease Same Increase Shanghai Mumbai Manila Santos Veracruz $2.7 2.1 1.7 3.5 4.1 $3.9 3.8 4.3 4.5 5.1 $6.3 6.5 6.1 5.7