siku Kuu Ltd. Manufactures and distributes a line of Christmas gifts. The company had neglected to keep its gifts line current. As a result, sales have decreased to approximately 25,000 units per year from a previous high of 125,000 units. The gifts have been redesigned recently and are considered by company officials to be comparable to its competitors' models. The company plans to redesign the gifts each year in order to compete effectively. Kama Kawaida, the Sales Manager, is not sure how many units can be sold next year, but she is willing to place probabilities on her estimates. Kama Kawaida's estimates of the number of units that can be sold during the next year and the related probabilities are as follows: Estimated Sales in units probabilities 50,000 0.10 75,000 0.40 100,000 0.30 125,000 0.20 The units would be sold for sh.500 each. The inability to estimate the sales more precisely is a problem for Siku Kuu Ltd. the number of units of this product is small enough to schedule the entire year's sales in one production run. If the demand is greater than the number of units manufactured, then sales will be lost. If the demand is below supply, the extra units cannot be carried over to the next season and would be given away to various charitable organizations. The production and distributions cost estimates are as follows: Units manufactured 50,000 75,000 100,000 125,000 Variable costs (Sh) 9,900,000 14,850,000 19,800,000 24,750,000 Fixed costs (Sh) 7,700,000 7,700,000 8,800,000 8,800,8000 Total costs (Sh) 17,600,000 22,550,000 28,600,000 33,550,000 The company intends to analyze the data to facilitate making a decision as to the proper size of the production run. Required: a) payoff table for the different sizes of production runs required to meet the four sales estimates prepared by Kama Kawaida for Siku Kuu Ltd. If Siku Kuu Ltd. relied solely on the expected monetary value approach to make decisions, what size of production run would be selected? (6 marks) b) Identify the seven basic steps that are taken in any decision process. Explain each step by reference to the situation presented by Siku Kuu Ltd. (14 marks)