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August 31, 2015

Homework Help: Probability/Decision Analysis

Posted by Jenna on Wednesday, February 20, 2013 at 4:16pm.

A manufacturer is trying to decide whether to build Building A or Building B. The profit per unit is $5.
Building A gets an annual cost of $100,000 with a production capacity of 25,000 units each year.
Building B gets an annual cost of $200,000 with a production capacity of 50,000 units each year.
There are 4 states of nature (demand) -- 5k, 10k, 25k, & 50k units per year.
How is the payoff table constructed?

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