3.13 A large orthopedic hospital has continued to experience an increased demand for customized knee implants. The administration is evaluating alternatives to meet this demand, including the purchase of SD printers {and related software) and outsourcing to a manufacturer. Potential prots and losses under different case demand levels. as identified through a feasibility analysis. are displayed in m1. Table EX 3.18.1 Payoff: Profit (in $000s) for Case Demand Levels Alternative High Moderate Low Buy One 3D (20) 85 125 Printer Buy Two 3D (45) 40 95 Printers Outsource 10 25 60a. Suppose administrators believe that the most likely case level is moderate. Additionally. they estimate that lovv and high case demand levels are approximately four times less likely to occur than moderate case demand. Using this information. derive the subjective probability distribution for each case level. Io. Develop a decision tree model. calculating expected values for each event node. Which alternative is selected? c. Suppose that administrators determine the profit estimates for the three 3D printing alternatives are unreliable, and would rather use the cost information associated with each alternative in their decision making. The total costs under each alternative are displayed In W. Construct a regrettable using the cost Information. Will the selected alternative be different if the administration ls pessimistic or optimistic? Explain. Table EX 3.18.2 Cost (in $000s) for Case Demand Levels Alternative High Moderate Low Buy One 3D Printer 400 415 425 Buy Two 3D Printers 725 775 800 Outsource 30 60 90