The DoorCo Corporation is a leading manufacturer of garage doors. All doors are manufactured in their plant in Carmel, Indiana, and shipped to distribution centers or major customers. DoorCo recently acquired another manufacturer of garage doors, Wisconsin Door, and is considering moving its wood door operations to the Wisconsin plant. Key considerations in this decision are the transportation, labor, and production costs at the two plants. The company developed three scenarios and determined the total costs under each decision and scenario as provided in the accompanying tables. Compute the standard deviation of the payoffs for each decision. What does this say about the risk in making the decision?

Click here to view the scenarios.

Scenarios

Compute the standard deviation of the payoffs for DoorCo staying in Carmel.

Demand falls slightly, with no noticeable effect on production.

Demand and production decline $20\%.$

Demand and production decline $40\%.$

& $($Round to the nearest dollar as needed.$)$

Compute the standard deviation of the payoffs for DoorCo moving to Wisconsin.

$ $($Round to the nearest dollar as needed.$)$

What does the standard deviation say about the risk in making the decision?

The decision to $$ is riskier because the standard deviation of its payoffs is $$ the standard deviation of the payoffs ofTotal costs

$\backslash$table$[[,$Slight Decline,$20\%$ Decline,$40\%$ Decline$],[$Stay in Carmel,$$985,000,$$$860,000,$$$850,000$The DoorCo Corporation is a leading manufacturer of garage doors. All doors are manufactured in their plant in Carmel, Indiana, and shipped to distribution centers or major customers. DoorCo recently acquired another manufacturer of garage doors, Wisconsin Door, and is considering moving its wood door operations to the Wisconsin plant. Key considerations in this decision are the transportation, labor, and production costs at the two plants. The company developed three scenarios and determined the total costs under each decision and scenario as provided in the accompanying tables. Compute the standard deviation of the payoffs for each decision. What does this say about the risk in making the decision?

Click here to view the scenarios.

Click here to view the total costs.

Scenarios

Compute the standard deviation of the payoffs for DoorCo staying in Carmel.

Demand falls slightly, with no noticeable effect on production.

Demand and production decline $20\%.$

Demand and production decline $40\%.$

& $($Round to the nearest dollar as needed.$)$

Compute the standard deviation of the payoffs for DoorCo moving to Wisconsin.

$ $($Round to the nearest dollar as needed.$)$

What does the standard deviation say about the risk in making the decision?

The decision to $$ is riskier because the standard deviation of its payoffs is $$ the standard deviation of the payoffs ofTotal costs

$\backslash$table$[[,$Slight Decline,$20\%$ Decline,$40\%$ Decline$],[$Stay in Carmel,$$985,000,$$$860,000,$$$850,000$