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This question refers to an example in the book Production/Operations Management by William J. Stevenson. The example involves a capacity-planning problem in which a company
This question refers to an example in the book Production/Operations Management by William J. Stevenson. The example involves a capacity-planning problem in which a company must choose to build a small, medium, or large production facility. The payoff obtained will depend on whether future demand is low, moderate, or high, and the payoffs are as given in the following table: Small facility $11* $14 $15 Medium facility 8 15 15 Large facility 5 11 22 I *Present value in $ millions. Given the payoff table, nd the alternative that would be chosen using the maximin criterion. (Negative answer should be indicated by a minus sign. Enter your answers in millions.) Maximin payoff for each alternative:
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