Question: A manager has compiled estimated profits for various capacity alternatives but is reluctant to assign probabilities to the states of nature. The payoff table is

A manager has compiled estimated profits for various capacity alternatives but is reluctant to assign probabilities to the states of nature. The payoff table is as follows:

STATE OF NATURE
#1 #2
A $ 20 * 148
Alternative B 128 87
C 86 40

*Profit in $ thousands.

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a. Is there any alternative that would never be appropriate in terms of maximizing expected profit?

multiple choice

Alternative A

Alternative B

Alternative C

None

b. For what range of P (2) would alternative A be the best choice if the goal is to maximize expected profit?

c. For what range of P (1) would alternative A be the best choice if the goal is to maximize expected profit?

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