QNT 561 Week 3 Solution.xlsx - Medium-Scale Expansion...

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Medium-Scale Large-ScaleExpansion ProfitsExpansion ProfitsP(x)P(x)DemandLow5020%020%Medium15050%10050%High20030%30030%Expected Profit ($1000s)145140Risk Analysis for Medium-Scale ExpansionDemand(x - µ)Low5020%-9590251805Medium15050%52512.5High20030%553025907.52,725σ =52.20Risk Analysis for Large-Scale ExpansionDemand(x - µ)Low020%-140196003920Medium10050%-401600800High30030%16025600768012,400σ =111.3659.15Compute the expected value for the profit associated with the twoexpansion alternatives. Which decision is preferred for the objective ofmaximizing the expected profit?
Annual Profit ($1000s)Annual Profit ($1000s)Annual Profit (x)$1000sProbability P(x)(x - µ)2(x - µ)2* P(x)σ2=Annual Profit (x)$1000sProbability P(x)(x - µ)2(x - µ)2* P(x)σ2=

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