The J. R. Ryland Computer Company is considering a plant expansion that will enable the company to begin production of a new computer product. The companys president must determine whether to make the expansion a medium- or large-scale project. The demand for the new product involves an uncertainty, which for planning purposes may be low demand, medium demand, or high demand. The probability estimates for the demands are 0.20, 0.50, and 0.30, respectively. Letting xindicate the annual profit in $1000s, the firms planners developed profit forecasts for the medium- and large-scale expansion projects.

Medium-Scale Large-Scale

Expansion Profits Expansion Profits

x f(x) y f(y)

Low 50 0.20 0 0.20

Demand Medium 150 0.50 100 0.50

High 200 0.30 300 0.30