The gorman manufacturing company must decide whether to manufacture a component part at its milan, michigan, plant or purchase the component part from a supplier. the resulting profit is dependent on the demand for the product. the following payoff table shows the projected profit (in thousands of dollars):

low demand medium demand high demand
decision alternative s1 s2 s3
manufacture, d3 -20 40 100
purchase, d2 10 45 70
the state-of-nature probabilities are p(s1) = 0.20, p(s2) = 0.20, and p(s3) = 0.60

p(f|s1) = 0.10 p(u|s1) = 0.90
p(f|s2) = 0.40 p(u|s2) = 0.60
p(f|s3) = 0.60 p(u|s3) = 0.40
b. use evpi to determine whether gorman should attempt to obtain a better estimate of demand. enter your answer in thousands dollars. for example, an answer of $200 thousands should be entered as 200,000.

gorman should attempt to obtain a better estimate of demand, as the additional information could be worth up to $ for gorman.

d. what is gorman’s optimal decision strategy? choose the correct option.

a. conduct test market, and manufacture component part, regardless of the market research report
b. conduct test market, and purchase component part, regardless of the market research report
c. conduct test market, and manufacture component part if market is favorable, or purchase component part if market is unfavorable
d. do not conduct test market, and purchase component part
e. do not conduct test market, and manufacture component part
e. what is the expected value of the market research information? enter your answer in thousands dollars. for example, an answer of $200 thousands should be entered as 200,000. if your answer is zero, enter "0".