1. Hawthorn company must make decision whether to produce its spare parts at its factory or buy from a foreign supplier. Generally, if the demand is high enough, the company could earn more profit if the spare parts are produced in-house. Otherwise, they will be more profitable if these spare parts are outsourced. The projected profits are given in the following table (in thousands of dollars) Options Produce Buy High demand States of nature Medium demand Low demand 400 120 -60 280 160 40 Probabilities 0.3 0.4 0.3 A research company asks Hawthorn company to conduct a study. The outcome of the study would be either Favorable (F) or Unfavorable (U) conditions. The relevant probabilities are given in the following table P(F) = 0.40 P(U) = 0.60 P(H/F) = 0.45 P(M/F) = 0.40 P(L/F) = 0.15 The research company requests $20,000 to conduct the study. a) What should be the decision of Hawthorn? b) What is the EVPI? P(H/U) = 0.20 P(M/U) = 0.40 P(L/U) = 0.40