A tire manufacturer needs to make a decision about the amount of production for the coming month (high vs.low).The level of production largely depends on the level of demand.For this situation,the level of demand (high,medium,low)is the state of nature.

Question

Quizplus · Accepted Answer

The level of demand is considered a state of nature because it is uncertain and outside of the control of the tire manufacturer. The decision about production depends on which state of nature occurs, i.e. high, medium or low demand.

A Tire Manufacturer Needs to Make a Decision About the Amount