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Case 2. Now develop a construction strategy for Sunray Co, assuming that the demand can be high, medium, and low with probabilities 7, 2, and
Case 2. Now develop a construction strategy for Sunray Co, assuming that the demand can be high, medium, and low with probabilities 7, 2, and .1 respectively. Expansion of a small plant will occur only if demand in the first 2 years is high. Table 2 provides estimates of the annual income. Ignore the time value for money. Table 2: Data for Sunray Co.: case 2 Annual income estimates (in 1,000) Alternative Full-size plant now Small-size plant now Expanded plant in 2 years High demand 1000 400 900 Medium demand 500 280 600 Low demand 300 150 200
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