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Back Problem 3 A VP of Strategic Partneships is in process of choosing one out of three possible business partners (X,Y,Z). The possible states

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Back Problem 3 A VP of Strategic Partneships is in process of choosing one out of three possible business partners (X,Y,Z). The possible states of nature are that the future demand may be either low, medium, or high. I The possible payoffs (in NPV terms) for each alternative under each state are shown in the table to the right: Which firm should she select under the criterion of: a) Hurwicz/EMV Method b) La Place Method Workspace a) Profit ($m) If Future Demand Is Alternative Low Medium High X 10 50 70 Y -10 44 120 Z 0 20 140 a 0.3 0.5 0.2 b) Profit ($m) If Future Demand Is Alternative Low Medium High X 10 50 70 Y -10 44 120 Z 0 20 140

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