A computer chip manufacturer is considering expanding production to meet possible increases in demand. Thecompany's alternatives are to construct a new plant, expand the existing plant, or do nothing in the short run. It will cost them $1 million to build a new facility and $600,000 to expand their existing facility. The market for this particular product may expand, remain stable, or contract. The marketing department estimates the probabilities of these market outcomes as 0.20, 0.50, and 0.30, respectively. The expected revenue for each alternative is presented in the table below.

MKT expands MKT stable MKT contracts

Build new plant $1,650,000 $1,000,000 $450,000

Expand plant $1,000,000 $850,000 $450,000

Do nothing $0 $0 $0

What course of action is optimal for the computer chip manufacturer? What is the expected profit in that case?

a.They should expand the existing plant, the expected profit is 160000.

b.They should do nothing, the expected profit is 0.

c.They should build a new plant if the market expands. The expected profit is 1650000.

d.They should build a new plant, the expected profit is 965000.