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A manager has compiled estimated costs for various capacity alternatives but is reluctant to assign probabilities to the states of nature. Assuming the values in the payoff table are estimated costs and the goal is to minimize expected costs. STATE OF NATURE #1 #2 A $ 20* 145 Alternative B 120 80 C 100 52 *Cost in $ thousands. b. Is there any alternative that would never be appropriate in terms of minimize expected cost? Alternative A Alternative B Alternative C None c. For what range of P (2) would alternative A be the best choice if the goal is to minimize expected cost? Choose Alternative A for P(#2) . d. For what range of P (1) would alternative A be the best choice if the goal is to minimize expected cost? Choose Alternative A for P(#1) .

Operation Management, Management Studies

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