Questions for this exercise a) Using the non-compensatory Maximax approach, which is aimed at maximising the maximum benefit that could be achieved from an alternative, suggest a decision to make. b) Using the non-compensatory Maximin approach, which is based on the idea that a chain is only as strong as its weakest link, suggest a decision to make c) Which alternative would you recommend under the minimax regret approach? d) The prior probabilities are 0.2 for high demand, 0.6 for moderate demand, and 0.2 for low demand. Find the EVPI to this manufacturer. (0.4)

Carter Coffee is considering several different ways to increase the production capacity at its Capital Hills factory. They may either: 1) build a new, larger facility, 2) expand their present facility, or 3) lease a subcontractor's facility. Based on the information provided in a recent marketing survey, the following table lists the potential increase in prots (in thousands) for each decision alternative (i.e. choice), depending on the amount of demand that will possibly arise next year. High demand Moderate demand Low demand Build 500 250 -150 Expand 350 300 100 Lease 300 300 200