Question: A manager is deciding whether or not to build a small facility. Demand is uncertain and can be either at a high or low

A manager is deciding whether or not to build a small facility. Demand is uncertain and can be either at a high or low level. If the manager chooses a small facility and demand is low, the payoff is $400. If the manager chooses a small facility and demand is high, the payoff is $300. On the other hand, if the manager chooses a large facility and demand is low, the payoff is -$50, but if demand is high, the payoff is $760. (a) Develop a payoff table below. (b) Develop a regret table below. Payoff Table Small Large Low High Regret Table Low Small Large (c) What would be the best decision based on the minimax regret? (7) Suppose that the probability of low demand is 0.75. (a) What is the maximum Expected Monetary Value (EMV)? Show your calculation steps below. High (b) What is the Expected Value of Perfect Information (EVPI)? Hint: EVPI = EVWPI - maximum EMV.

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