Question: Problem 3: Ikea Canada is considering producing a new lamp and estimates the annual demand, D (in thousands of units). The demand has the following

Problem 3: Ikea Canada is considering producing a

Problem 3: Ikea Canada is considering producing a new lamp and estimates the annual demand, D (in thousands of units). The demand has the following mass function (D=30)=0.30, P(D =50) =0.40, P(D =80) =0.30. Each one sells for $5, with a cost of $3. Ikea is thinking of building a machine to produce the lamp, which costs $800,000. Assume that $1 is received every year (forever), which is equivalent to receiving $10 at present. Should Ikea build the machine? Considering the reward for each action and state of the world to be in terms of net present value, use each decision criterion (maximin, maximax, minimax regret and expected value) to determine whether Ikea should build the machine

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