You are called on to decide how your company should produce its new cell phone screen defroster(for

use by skiers and others spending time out of doors in thecold) You develop a cost matrix($000's

shown to the right. Complete parts a and b

a) Suppose P(Recession)=0.3, P(Stable)=0.3, and P(Expansion)=0.4.

What is the expected value of eachaction?

EV (OUTSOURCE) = Thousand's dollars

EV (IN HOUSE) =Thousands dollars

Recession

Stable

Expansion

Out-Source

200

350

280

In-House

170

250

370