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The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier.
The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent on the demand for the product. The following payoff table shows the projected profit in thousands of dollars: State of Nature Low Demand Medium Demand High Demand Decision Alternative s s s Manufacture, d Purchase, d The stateofnature probabilities are Ps Ps and Ps Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. Enter your answer in thousands dollars. For example, an answer of $ thousands should be entered as Gorman should attempt to obtain a better estimate of demand, as the additional information could be worth up to $ for Gorman.
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