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Use the Following Data to Answer Questions 88-100 -Refer to the Data on Expected Demand for Weston Gadgets,Inc

Question 86

Multiple Choice

Use the following data to answer questions 88-100.  Expected Demand for Weston Gadgets, Inc.  Decision Alternative  Low 35%  Medium 30%  High 35%  Outsource $16.00 million $28.00 million $66.00 million  Build capacity $4.00 million $32.00 million $26.00 million  Do nothing $9.00 million $18.00 million $66.00 million \begin{array}{l} \quad \quad \quad \quad \quad \quad \quad \quad \text { Expected Demand for Weston Gadgets, Inc. }\\\begin{array} { | l | l | l | l | } \hline \text { Decision Alternative } & \text { Low 35\% } & \text { Medium 30\% } & \text { High 35\% } \\\hline \text { Outsource } & \$ 16.00 \text { million } & \$ 28.00 \text { million } & \$ 66.00 \text { million } \\\hline \text { Build capacity } & \$ 4.00 \text { million } & \$ 32.00 \text { million } & \$ 26.00 \text { million } \\\hline \text { Do nothing } & \$ 9.00 \text { million } & \$ 18.00 \text { million } & \$ 66.00 \text { million } \\\hline\end{array}\end{array}
-Refer to the data on Expected Demand for Weston Gadgets,Inc.Based on the Hurwicz criterion,what is the payoff for the option to outsource if you used the coefficient of realism of 0.6?


A) $46.00 million
B) $20.80 million
C) $43.20 million
D) $33.20 million

Correct Answer:

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