Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Low High Decision Basic model Advanced model $90,000 $145,000 $50,000 $225,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the nearest dollar. $ $ Opportunity Loss Matrix Decision alternative Basic model Advanced model Maximum Decision alternative Basic model Advanced model Calculate the amounts foregone by not adopting the optimal course of action for each possible demand level. Determine the maximum opportunity cost for each model. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest dollar. $ $ Minimum Low Demand Volume Future events Medium High Medium $115,000 $90,000 Maximum $ $ Given the uncertainty associated with the demand volume, and no other information to work with, what decision would you make? The aggressive strategy (maximax) is to oose the -Select- The conservative strategy (maximin) is to choose the -Select- The opportunity loss strategy is to choose the -Select- 6 Payoff Table 7 Decision Alternative 8 Expand existing plant 9 Build new plant 10 _1 _2 13 Probability _4 5 Opportunity Loss Matrix 6 Decision Alternative 17 Expand existing plant 8 Build new plant 9 20 21 22 23 Maximax Decision 24 Maximin Decision 25 Opportunity Loss Decision 26 Expected Value Decision 27 EVPI 1 Decision Analysis 2 Enter the data only in the yellow cells. 3 This template is designed to allow up to 5 decision alternatives and future events. 4 Enter names of decision alternatives and future events in the appropriate cells in column A or K and row 7. Probabilities are optional. 5 Future Events Low Product Demand High Product Demand $200,000.00 $300,000.00 $100,000.00 $450,000.00 Future Events Low Product Demand High Product Demand $0.00 $150,000.00 $100,000.00 $0.00 Build new plant Expand existing plant Build new plant D #N/A #N/A G Cengage Learning Not for commercial use. H Maximum Minimum Expected Value $300,000.00 $200,000.00 $450,000.00 $100,000.00 Maximum Expected Value Maximum $150,000.00 $100,000.00 $0.00