Question $2$

$12\mathrm{.}5pts$

Suppose a distribution conter is considering three options for expansion $-(1)$ to expand into a new plant, $(2)$ to add on third$-$shift to the daily schedule, and $(3)$ a small expansion to the existing facility. There are three possibilities for demand. These are high, medium, and low having probabilities of $40\%,33\%,$ and $27\%$ respectively. Suppose that the profits for the expansion plans are as follows:

The new plant expected outcomes are $$110,000,$$$50,000,$ and $$15,000,$

the thind shit't consideration woutd result in outcomes of $$40,000,$$$20,000,$ and $-$$$5,000$ and

the small expansion choice would in the following doilar amounts $$15,000,$$$13,000,-$$$1,500.$

The amount that the company must invest in each alternative is$,$ new plant $=$ $$48,000,$ thind shift $=$ $$15,100,$ small expansion $=$$$8,700$

a$.$ The profit$/$oss $($EMV$)$ tor the new plant is $

b$.$ The proficloss $($EMV$)$ for adding a third shift is

c$.$ The profitloss $($EMM$)$ for the smal$)$ expansion is $5$

d$.$ Which of the expansion plans should the manager choose? New Plant

e$.$ What if an outside consultant was hired by the organization and the probabilities were re$-$evaluated as as result of better information. The results of the research$/$feedback are now $30\%,37,33\%($high$,$ medium. $($ow$).$ What choice should the manager make and what is the EMV?

Ind Shif hated an an EMy o $Y$