A company is considering introducing a new product and has two production options. The first is to produce within an existing unit with available capacity. The second option is to open a dedicated facility for both production and marketing of the product. If produced in the existing unit, management projects potential sales of $250,000 (strong), $110,000 (moderate), and $60,000 (weak). In contrast, using a dedicated facility, projected sales are $400,000 (strong), $200,000 (moderate), and $120,000 (weak) due to additional marketing. There's a 30% probability for weak sales and a 45% probability for moderate sales. The annual cost for the existing unit is $60,000, while a new facility would cost $100,000. Based on the 'Bayes decision' criterion, explain what is the 'Expected Value without Perfect Information' of this situation?

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The expected value without perfect information is 555000 This means that considering the probabilities of different sales scenarios weak moderate and ... View the full answer