The following payoff table provides profits based on various possible decision alternatives and various levels of demand at Amber Gardner's software firm:

Demand Level Probability. 0.3 0.7 Low High Alternative A $12,500 $30,000 B $14,000 $14,000 C $7,500 $41,000 point) D ($2,000). $50,000

*Profits in $ thousands

a. Using Excel, create an X,Y plot the expected-value lines for the four alternatives on a graph. Label the graph completely and clearly. (6 pts)

b. Is there any alternative that would never be appropriate in terms of maximizing expected profit? Explain on the basis of your graph in part a. (4 pts)

c. For each of the four alternatives, write the linear equation that expresses the expected payoffs across various probability of high demand. (5 points)

d. Over what range of P(High Demand) would alternative B be the best choice if the goal is to maximize expected profit? Show work. (5 pts)

e. Over what range of P(High Demand) would alternative D be the best choice if the goal is to maximize expected profit? Show work. (5 pts)

f. Using the probability of low demand as 0.30 (therefore probability of high demand = 0.70), compute the expected payoffs of each of the alternatives. Show work. Using the expected payoff criterion, which of the alternatives will you recommend? (5 pts)

g. Using the probability of low demand as 0.30 (therefore probability of high demand = 0.70), compute the EVPI. Show work. Explain the significance of this number (i.e. what does it mean in terms of decision- making on the alternatives? How is this information to be used?). (10 pts).