XYZ is a paint product manufacturer,and one of the plants is experiencing a substantial increase in demand.The future demand for the products could be low,medium,or high,with probabilities estimated to be 25%,50%,and 30%,respectively.The company wants to determine the financial impact associated with the three decision alternatives under the varying levels of demand.Given the following payoff matrix,determine which option has the lowest expected regret.The company should ______.

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\text { Demand }

\begin{array} { | c | c | c | c | } \hline \text { Decision Aternative } & \text { Low } ( 20 \% ) & \text { Medium } ( 50 \% ) & \text { High (30\%) } \\\hline \begin{array} { c } \text { Subcontract additional } \\\text { capacity }\end{array} & \$ 7 \text { million } & \$ 40 \text { million } & \$ 70 \text { m illion } \\\hline \text { Build a new plant } & - \$ 55 \text { million } & \$ 25 \text { million } & \$ 100 \text { million } \\\hline \text { Do nothing } & \$ 15 \text { million } & \$ 30 \mathrm {~m} \text { illion } & \$ 85 \text { million } \\\hline\end{array}

A)subcontract additional facility.
B)build a new plant.
C)do nothing.
D)choose a new alternative

Decisions Are Made When There Are Not Only Multiple States

Multiple Choice

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