A Small Parts Manufacturer Has Just Engineered a New Product

Multiple Choice

A small parts manufacturer has just engineered a new product for the automotive industry.In order to produce the part the company can expand existing facilities,acquire a competitor,or subcontract production.The company believes the product will either experience high market demand or low market demand,with probabilities of 0.6 and 0.4,respectively.The following payoff table describes the company's decision situation.

The best decision according to the expected value criterion is:

A) Acquire Competitor
B) Expand Facilities
C) Subcontract Production
D) High Demand