Question: I can't understand the question a: What should be the decision of Hawthorn? and what to do with it. 1. Hawthorn company must make

I can't understand the question a: " What should be the decision of Hawthorn?" and what to do with it.

I can't understand the question a: " What should be the decision

1. Hawthorn company must make decision whether to produce its spare parts at its factory or buy from a foreign supplier. Generally, if the demand is high enough, the company could earn more profit ifthe spare parts are produced inhouse. Otherwise, they will be more profitable if these spare parts are outsourced. The projected profits are given in the following table (in thousands of dollars) States of nature Options High demand Medium demand Low demand Produce 400 120 -60 Buy 280 160 40 Probabilities 0.3 0.4 0.3 A research company asks Hawthorn company to conduct a study. The outcome of the study would be either Favorable (F) or Unfavorable (U) conditions. The relevant probabilities are given in the following table P(F) = 0.40 P(H/F) = 0.45 P(H/U) = 0.20 P(U) = 0.50 P(M/F) = 0.40 P(M/U) = 0.40 P(L/F) = 0.15 P(L/U) = 0.40 The research company requests $20,000 to conduct the study. a) What should be the decision of Hawthorn? b) What is the EVPI? c) What is the efficiency of the sample information

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