James Madison, president of Madison Manufacturing, inc,. is considering whether to build more manufacturing plants in...

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James Madison, president of Madison Manufacturing, inc,. isconsidering whether to build more manufacturing plants in MadisonWisconsin. He is considering three sizes of plant: Small, Medium,or Large. At the same time, an uncertain economy makes ascertainingthe demand for the new plants difficult. His management team hasprepared the following cost payoff table (in thousands ofdollars).
Decision Alternatives States of Nature
Good Economy Fair Economy Poor Economy Expected Value
Small plant d1 $650 $650 $600 ?
Medium plant d2 $900 $600 $300 ?
Large plant d3 $800 $650 $500 ?
Probability Factor 40% 35% 25% ?
Best decision Alternative= ?
1. Calculate the expected value for each decision alternativeusing Expected Value Strategy in Excel Spread Sheet.
2. Specify the best decision alternative to minimize cost.

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The expected value of any decision alternative is1 Prepare the following sheetget thisFrom the above the expected cost payoff for different decisionalternative areSmall See Answer

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