Quality $($Pty$)$ Ltd$,($Quality$)$ uses a third$-$party for the packaging of Quality$$s products.

The current average cost per packaging is R$124.$ Quality is trying to decide whether

to establish an in$-$house packaging service. A number of factors could affect the

average total cost per packaging for the in$-$house service. The table below shows the

possible average total costs and the probability of each one occurring.

Average total cost in Rands and Probability $\%$

$10714\%$

$11212\%$

$12213\%$

$12410\%$

$12816\%$

$13520\%$

$14815\%$

The expected value of the average total cost, based on the probability distribution

above is R$126\mathrm{.}36.$

REQUIRED:

Explain the decision that the management of Quality $($Pty$)$ Ltd is likely to make, based

on the probability distribution and the current packaging cost of R$124$ per packaging,

if the management is:

$($a$)$ Risk neutral

$($b$)$ Risk averse

$($c$)$ Risk seeker

Round your answers to two decimal places where required.

$(6$ marks$)$