Question: 6. An operations manager's staff has compiled the information below for four manufacturing alternatives (E, F, G, and H) that vary by production technology and

6. An operations manager's staff has compiled the

6. An operations manager's staff has compiled the information below for four manufacturing alternatives (E, F, G, and H) that vary by production technology and the capacity of the machinery. All choices enable the same level of total production and have the same lifetime. The four states of nature represent four levels of consumer acceptance of the firm's products. Values in the table are net present value of future profits in millions of Ringgit. Forecasts indicate that there is a 0.10 probability of acceptance level 1, 0.25 chance of acceptance level 2, 0.30 chance of acceptance level 3, and 0.35 chance of acceptance level 4. Determine which of the four manufacturing alternatives gives the BEST payoff. Alternatives Alternative E Alternative F Alternative G Alternative H 1 50 30 70 -140 State of Nature (RM millions) Consumer Acceptance level 2 3 4 50 70 60 50 80 130 80 70 60 -10 150 220

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