Refer to Problem 13. Sanjay Kumar of Kumar Electronics is reluctant to assign probabilities to the different states of nature (demand). He asks for your help in determining which alternative among the two types of plants—a small or large facility—he should build for a range of probabilities of low demand, i.e., P (Low demand). Help Sanjay to make a decision by performing a sensitivity analysis for P (Low demand).

Data from problem 13

Kumar Electronics is planning to introduce a new line of electronic products it plans to market and sell in India. Sanjay Kumar, the owner, is trying to decide whether to build a small or large manufacturing facility in his hometown of Jodhpur. High demand for the new line of products and a large facility will generate a net profit of $600,000. Building a small facility and then experiencing high demand will provide a net profit of $250,000. Yet, if a large facility is built and the demand turns out to be low, Sanjay will lose $200,000. A small facility and low demand will result in a net profit of $100,000. The probability of the demand being low is 0.4, and the probability of it being high is 0.6: