Factory Location22 A manufacturer of electrical machinery is located in a cramped, though low-rent, factory close to the center of a large city. The firm needs to expand, and it could do so in one of three ways: (1) Remain where it is and install new equipment, (2) move to a suburban site near the same city, or (3) relocate in a different part of the country where labor is cheaper. Its decision will be influenced by the fact that one of the following will happen: (I) The government may introduce a program of equipment grants, (II) a new suburban highway may be built, or (III) the government may institute a policy of financial help to companies who move into regions of high unemployment. The value to the company of each combination is given in the following table:
Government’s Options | ||||
Manufacturer’s Options | I | II | III | |
1 | 200 | 150 | 140 | |
2 | 130 | 220 | 130 | |
3 | 110 | 110 | 220 |
If the manufacturer judges that there is a 20% probability that the government will go with option I, a 50% probability that it will go with option II, and a 30% probability that it will go with option III, what is the manufacturer’s best option?
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Finite Mathematics and Applied Calculus (MindTap Course List)
- Elementary Linear Algebra (MindTap Course List)AlgebraISBN:9781305658004Author:Ron LarsonPublisher:Cengage Learning