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Financial Data The total production cost for each case of BC6 is $125, and for each case that FCl sells, it make a profit of
Financial Data The total production cost for each case of BC6 is $125, and for each case that FCl sells, it make a profit of $20. If each facility produces more than what the market requires, the production sold at $35.00 per case. The expansion facilities will produce up to their maximum capacity. Th company has committed to satisfy the market demand up to its full production capacity at each its facilities. Options and Market Demand Since BC-6 is a proprietary product, the company can only meet the market demand up to its ful production capacity. Megan John, a veteran in the films chemicals business has made the company one of the largesi companies by implementing conservative policies aiming at minimizing business payoffs and wants to continue with this approach for this project as well. Megan John hired you as the project manager, and you must irecommend what type of expansion facility to build. Based on the above information: 1. Estimate the decision (payoff) table for this problem. (30 Marks) 2. Using the Optimistic criterion: (4 marks) a. What do you recommend? b. What will be the payoff value? 3. Using the Pessimistic criterion (4 marks) a. What do you recommend? b. What will be the payoff value? 4. Using the criterion of Realism, alpha =0.30 (4 marks) a. What do you recommend? b. What will be the payoff value? 5. Criterion: Decisions under risk ( 4 marks) a. What do you recommend
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