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ABC company is trying to decide how best to handle their payroll function. There are three options under consideration They could hire an expert in
ABC company is trying to decide how best to handle their payroll function. There are three options under consideration They could hire an expert in payroll management, they could hire temporary workers who would report to one of the current managers, or they could outsource the payroll function to another company that specialize in that area. The costs of some of these options depend on the volume of business that ABC does because some of their labor costs are variable. The following table illustrates ABC's payroll costs: a) Analyze ABC's payroll costs using the optimistic decision criterion. Which option is best? b) Analyze ABC's payroll costs using the pessimistic decision criterion. Which option is best? c) Analyze ABC's payroll costs assuming the probability of low demand is 50%. For a risk-neutral decision maker which option is best? d) Calculate the Expected Value of Perfect Information for this
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