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Mick Karra is the manager of MCZ Drilling Products, which produces a variety of specialty valves for oil field equipment. Recent activity in the oil fields has caused demand to increase drastically, and a decision has been made to open a new manufacturing facility. Three locations are being considered, and the size of the facility would not be the same in each location. Thus, overtime might be necessary at times. The following table gives the total monthly cost (in $1,000s) for each possible location under each demand possibility. The probabilities for the demand levels have been determined to be 20% for low demand, 30% for medium demand, and 50% for high demand.
DEMAND IS LOW
DEMAND IS MEDIUM
DEMAND IS HIGH
Ardmore, OK
85
110
150
Sweetwater, TX
90
100
140
Lake Charles, LA
110
120
130
Which location would be selected based on the pessimistic criterion?
Select one:
a.
Lake Charles ($130)
b.
Sweetwater ($140)
c.
Ardmore ($110)
d.
LakeCharles($150)

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