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KEC ( Kingston Engineering Company) is considering whether to manufacture a component part at its London plant or purchase the component from a supplier in
KEC ( Kingston Engineering Company) is considering whether to manufacture a component part at its London plant or purchase the component from a supplier in Europe. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in 000's of 's): State of Nature Decision Alternatives Low Demand s1 Medium Demand s2 High Demand s3 Manufacture, d1 -30 50 110 Purchase, d2 20 40 80 The state-of-nature probabilities are: P(s1) = 0.20, P(s2) = 0.30, and P(s3) = 0.50. (a) Use a decision tree to recommend a decision
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