Answered: State whether you think it would be…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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State whether you think it would be best to pursue a medium-scale expansion or a large-scale expansion. Calculate and compare the expected profits and variances for the medium-scale and large-scale expansions.

Transcribed Image Text:You are on the board of directors for Sew and Tell, an up and coming apparel brand focusing on producing t-shirts with a positive message. The company is looking to ramp up production and has hired an independent consulting group to evaluate the profitability of either a medium or large scale expansion. Your boss, the company president Jack Pott, has sent you the following еmail: Board of Directors Member, The consulting group has completed the analysis. The following table breaks down the results with us pursuing either a medium or large scale expansion. It gives low, medium, and high projections, the associated amount of profits (in thousands of $), and the probability of each outcome happening. Medium-Scale Expansion Profit Large-Scale Expansion Profit Probability Probability Low 50 .2 .2 Medium 150 .5 100 .5 High 200 .3 300 .3 Personally, I would love to hit the jackpot and reach a profit of $300,000, but our goal as a is to maximum profit in the least risky way. Taking into account both the risks and rewards, do you think we should pursue a medium-scale expansion or a large-scale expansion? сотрапy Thanks, Jack Pott

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