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Modern Electronics specializes in manufacturing modern electronic components.  It also builds the equipment that produces the components.  Modern Electronics is considering building a new facility but the estimated profits would be impacted by the type of market that develops.  The probability for a strong market is 0.1; for a fair market is 0.3; and for a poor market is 0.6. You are responsible for advising the president of Modern Electronics on the type facility that should be built or to not build a facility at all.  The table shows the estimated profits under each market and for each size facility.

Explanation: You can use QM for Windows->Decision Analysis->Decision Table with the above information.

Estimated Profits

Strong Market

Fair Market

Poor Market

Build a large facility

550,000

150,000

-500,000

Build a medium-size facility

500,000

125,000

-150,000

Build a small facility

250,000

75,000

-25,000

Do not build a facility

0

0

0

1.  What is your recommendation to the president based on expected value that maximizes profits (EMV)?

Answer:

Explanation (include expected monetary value): 

Software Output:

2.  Provide a second recommendation to the president that minimizes regret.

Answer: 

Explanation (include expected monetary value):

Software Output:

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