What decisions should be made using the average payoff strategy in these problems?

"The Door Co 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. Door Co 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. Complicating matters is the fact that marketing is predicting a decline in the demand for wood doors. The company developed three scenarios:

1. Demand falls slightly, with no noticeable effect on production.

2. Demand and production decline 20%. 3. Demand and production decline 40%. The following table shows the total costs under each decision and scenario. "

Suppose that a car rental agency offers insurance for a week that costs $ 75. A minor fender bender will cost $ 2,000, whereas a major accident might cost $ 16,000 in repairs. Without the insurance, you would be personally liable for any damages. What should you do? Clearly, there are two decision alternatives: take the insurance, or do not take the insurance. The uncertain consequences, or events that might occur, are that you would not be involved in an accident, that you would be involved in a fender bender, or that you would be involved in a major accident. Develop a payoff table for this situation.
Slaggert Systems is considering becoming certified to the ISO 9000 series of quality standards. Becoming certified is expensive, but the company could lose a substantial amount of business if its major customers suddenly demand ISO certification and the company does not have it. At a management retreat, the senior executives of the firm developed the following lowing payoff table, indicating the Net present value of profit over the Next 5 years.

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Slight Decline 20% Decline Decline 40% Stay In Carmel $1,000,000 900,000 $840,000 Move to Wisconsin $1,200,000 $915,000 $800,000 Customer Response Standards Standards Required Not Required Become certified $575,000 $500,000 Stay uncertified $450,000 $600,000