Chapter 5.4-5.5 5 The JR. Ryland Computer Company is considering a plant expansion to enable the company to begin production of a new computer product. The company's president must determine whether to make the expansion a medium or large-scale project. Demand for the new product is uncertain, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for demand are 0.20, 0.40, and 0.40, respectively. Letting x and y indicate the annual profit in thousands of dollars, the firm's planners developed the following profit forecasts for the medium- and large-scale expansion projects Medium-Scale Expansion Profit Large-Scale Expansion Profit f(x) Y ((y) Low 50 0.20 0.20 Demand Medium 150 0.40 100 0.40 High 200 0.40 300 0.40 (a) Compute the expected value for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. EV Medium-Scale 145 Large-Scale 140 Which decision is preferred for the objective of maximizing the expected profit? Large-Scale (b) Compute the variance for the profit associated with the two expansion alternatives. Round your answers to whole numbers, if needed. Medium-Scale Large-Scale Var 2725 12400 Which decision is preferred for the objective of minimizing the risk or uncertainty? Medium-Scale x A-Z