Giant Manufacturing is a Taiwanese bicycle manufacturer, which makes premium bicycles. An important decision facing the firm is whether to manufacture wheels itself or purchase wheels from an external supplier. If Giant manufactures wheels itself, it has to set up a factory for the production of wheels, which incurs a high cost and thus affects the firm's profitability. Since the demand for bicycles is uncertain, Giant needs to examine the historic sales data and, based on this, makes a reasonable estimation about possible demand scenarios. The decision also requires Giant to work out the estimate of profit for each demand scenario and decision alternative. The following payoff table shows the projected profits (in millions of dollars) together with the probability of each demand scenario: States of Nature Detis-ion _ Low Demand _ Medium Demand __ High Demand alternative _ P(s_1) =0.4 . Plszl = 0.4 _ Pl53} = 0.2 Manufacture, d1 -30 _ 40 . 90 Purchase, d2 10 30 50 a. Use a decision tree to recommend a decision for Giant. [6 marks] b. Compute EVPI {Expected Value of Perfect Information) to determine whether Giant should attempt to obtain a better estimate of demand. [4 marks]