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 S1 S2 S3 Manufacture, di -25 55 90 Purchase, d2 15 45 60 The state-of-nature probabilities are P(51) = 0.35, P(52) = 0.35, and P(53) = 0.30. 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 EVPI = $ thousands. C. A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows: P( Usi) = 0.30 P(F | s1) = 0.70 P(F | s2) = 0.30 P(F | s3) = 0.70 P(U | s2) = 0.70 P(U | s3) = 0.30 What is the probability that the market research report will be favorable? If required, round your answer to three decimal places. P(F) 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 d2 If U then di Expected value = $ thousands. e. What is the expected value of the market research information? Round your answer to two decimal places. Enter your answer in thousands of dollars. Expected value = $ thousands. f. What is the efficiency of the information? If required, round your answer to one decimal place. Efficiency %