The J R Ryland Computer Company is considering a plant

Last updated: 2/9/2024

The J R Ryland Computer Company is considering a plant expansion to enable the company to begin production of a new computer product The company s president must determine whether to make the expansion a medium or large scale project Demand for the new product is uncertain which for planning purposes may be low demand medium demand or high demand The probability estimates for demand are 0 34 0 50 and 0 16 respectively Letting z and y indicate the annual profit in thousands of dollars the firm s planners developed the following profit forecasts for the medium and large scale expansion projects Demand Medium Large Which decision is preferred for the objective of minimizing the risk or uncertainty Low Medium High a Compute the expected value to 2 decimals for the profit associated with the two expansion alternatives Medium S thousand thousand Large S Which decision is preferred for the objective of maximizing the expected profit Select your answer preferred b Compute the variance to 2 decimals for the profit associated with the two expansion alternatives Medium Scale Expansion Profit f x 0 34 I 50 150 200 0 50 0 16 Large Scale Expansion Profit f y 0 34 0 50 0 16 Y 0 100 300