Problem $5$S$-1($Static$)$

A small building contractor has recently experienced two successive years in which work opportunities exceeded the firm$$s capacity. The contractor must now make a decision on capacity for next year. Estimated profits under each of the two possible states of nature are as shown in the table below.

NEXT YEAR'S

DEMAND

Alternative Low High

Do nothing $ $50*$ $ $60$

Expand $2080$

Subcontract $4070$

$*$ Profit in $ thousands.

Click here for the Excel Data File

Which alternative should be selected if the decision criterion is $($Enter your answers in thousands.$)$