Question: PLEASE SHOW STEPS TO SOLVE!! 1. On observing the market trends, the company decides to plan and prepare for inflation. The disaster management team came

PLEASE SHOW STEPS TO SOLVE!!

1. On observing the market trends, the company decides to plan and prepare for inflation. The disaster management team came up with the following sales figures for multiple scenarios. The company looks at the following decisions - (1) build a new warehouse, (2) increase current warehouse capacity, and (3) no change. Which decisions would the company take in each of the optimistic, conservative, and minmax approaches? The revenue projects in each scenario are as given in the table below.

	HIGH IMPACT	MEDIUM IMPACT	LOW IMPACT
NEW WAREHOUSE	71400	215500	264700
INCREASE CAPACITY	94750	140000	152000
NO CHANGE	103450	95000	88500

2. Based on the probability estimates for the impact of inflation, evaluate the best decision based on the Expected Value approach in each of the 3 scenarios.

	SCENARIO 1	SCENARIO 2	SCENARIO 3
HIGH IMPACT	0.7	0.8	0.5
MEDIUM IMPACT	0.2	0.1	0.1
LOW IMPACT	0.1	0.1	0.4

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