Question: 6. Lau Enterprise specializes in manufacturing computer tables. It is considering building a new facility which is either large, medium or small, to produce the

6. Lau Enterprise specializes in manufacturing

6. Lau Enterprise specializes in manufacturing computer tables. It is considering building a new facility which is either large, medium or small, to produce the tables. The following table shows the payoffs (RM in thousands) for a proposed facility under three market conditions (strong, fair, and poor markets). Determine which of the three market conditions gives the best payoff. State of Nature (RM thousands) Investment Strong Market Fair Market Poor Market Large Facility 90 10 Medium Facility 60 50 15 Small Facility 30 30 25 Probability 0.5 0.3 0.2 70

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