$(*)$ Suppose the Shelly Group has identified two possible demand levels for

copies per month:

What is the expected cost if it costs $$700$ per month to lease a new copier and

the variable cost is $$0\mathrm{.}10$ for each copy?

Consider the two capacity options for Arktec Manufacturing shown below:

Suppose the company has identified the following three possible demand

scenarios:

a$.{(}^{**})$ What is the expected value of each option? Which option would

you choose, based on this information?

b$.{(}^{****})$ Suppose the lowest and highest demand levels are updated to

$40,000$ and $110,000,$ respectively. Recalculate the expected values.

What happened?

c$.{(}^{**})$ Draw the decision tree for Arktec Manufacturing. When

drawing your tree, assume that managers must select a capacity

option before they know what the demand level will actually be$.$

d$.(**)$ Calculate the expected value for each decision branch. Which

option would you prefer? Why?