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opportunity-loss strategy The opportunity-loss strategy involves making decisions by considering the potential loss or opportunity cost associated with each choice under uncertain conditions. It aims to minimize the opportunity cost or potential loss rather than maximizing gains or minimizing losses outright. In the context of DoorCo's decision to either stay in Carmel or move its wood door operations to Wisconsin, while considering the predicted declines in demand (slight, 20%, and 40%), the opportunity-loss strategy focuses on minimizing the potential loss across scenarios. Let's analyze the costs for DoorCo's decision under each scenario: - Slight Decline: - Stay in Carmel: $1,000,000 - Move to Wisconsin: $1,100,000 - 20% Decline: - Stay in Carmel: $800,000 - Move to Wisconsin: $950,000 - 40% Decline: - Stay in Carmel: $840,000 - Move to Wisconsin: $750,000

Under the opportunity-loss strategy, DoorCo would aim to minimize the potential loss in the worst-case scenario (40% decline). The decision that mitigates the potential loss in the scenario with the most significant decline in demand would be preferred. In this context, DoorCo would choose to move its wood door operations to Wisconsin in the 40% decline scenario. By doing so, DoorCo would potentially reduce its costs to $750,000 compared to the $840,000 cost of staying in Carmel in the same scenario. The opportunity-loss strategy prioritizes minimizing the potential loss or opportunity cost in the scenario that poses the most significant risk. It doesn't necessarily aim to maximize gains but rather focuses on mitigating losses and minimizing the impact of adverse outcomes, aligning with a more risk-averse approach compared to the aggressive strategy.

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