Problem 13-25 (Algorithmic) The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): State of Nature Low Demand Medium Demand High Demand Decision Alternative Si $2 53 Manufacture, di -25 55 90 Purchase, 2 15 45 60 The state-of-nature probabilities are P(51) = 0.35, P(59) = 0.30, and P(53) = 0.35. a. Use a decision tree to recommend a decision. Recommended decision: Purchase component b. Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. Round your answer to two decimal places. Enter your answer in thousands of dollars. Yes X EVPI $ 11 thousands c. A test market study of the potential demand for the product is expected to report either a favorable (F) on unfavorable (U) condition. The relevant conditional probabilities are as follows: P{F I 1) = 0.70 PEU I 1) = 0.30 P(F52) = 0.30 PEU 52) = 0.70 P(F53) = 0.60 PU 53) - 0.40 What is the probability that the market research report will be favorable? If required, round your answer to three decimal places. P(A) - d. What is Gorman's optimal decision strategy? Round your answer to two decimal places. Enter your answer in thousands of dollars. Decision strategy: If F then If U then Expected value $ thousands. e. What is the expected value of the market research Information? Round your answer to two decimal places. Ent your answer in thousands of dollars. Expected value - $ thousands 1. What is the efficiency of the information? If required, round your answer to one decimal place. Efficiency - % Feedback Check My Work Partially correct