Question: 2. A small building contractor has recently experienced two successive years in which work opportunities exceeded the firm's capacity. The contractor must now make a

2. A small building contractor has recently

2. A small building contractor has recently experienced two successive years in which work opportunities exceeded the firm's capacity. The contractor must now make a decision on capacity for next year. Estimated profits under each of the two possible states of nature for next year's demand are as shown in the table below for next year's demand. NEXT YEAR'S DEMAND Alternative Do nothing Expand Subcontract Low High $50* $60 20 40 *Profit in $ thousands. 80 70 Construct a graph that will enable you to perform sensitivity analysis on the problem. Over what range of P(high) (or P(2)) would the alternative of doing nothing be best? Expand? Subcontract? 20 marks Page 1 of 2

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