Joyce has determined that the probabilities of strong demand and weak demand are 0.6 and 0.4 respectively.

a. Choose the best option for Joyce using this probability data.

b. What is the most Joyce should pay for additional information about the demand for this product?

Joyce is the director of manufacturing for Titan Industries, which is considering building a new facility in the Midwest. The demand for the product manufactured in the facility will be either strong or weak. The following decision table summarizes Joyce’s options and the associated payoffs in millions of dollars.
Demand Option Strong Weak Build large facility $1.3 -$1.7 Build small facility $0.8 -$0.2 Don’t build facility $0 $0.AppendixLO1