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 upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars):     State of Nature   Low Demand Medium Demand High Demand Decision Alternative s1 s2 s3 Manufacture, d1 -20 40 100 Purchase, d2 10 45 70   The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30.   Use a decision tree to recommend a decision.Recommended decision:    Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand.   EVPI: $  fill in the blank 3 A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows: 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 What is the probability that the market research report will be favorable? If required, round your answer to three decimal places.P(F) = fill in the blank 4 What is Gorman's optimal decision strategy?Decision strategy:If F then    .If U then    . What is the expected value of the market research information?Expected value: $  fill in the blank 7 What is the efficiency of the information? If required, round your answer to one decimal place.Efficiency: fill in the blank 8%

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 upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars):

The state-of-nature probabilities are P(s₁) = 0.35, P(s₂) = 0.35, and P(s₃) = 0.30.

1. Use a decision tree to recommend a decision.
   
   Recommended decision: 
    
   
   
   
2. Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand.
   
   
    
   
   
   EVPI: $  fill in the blank 3
   
   
3. A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows:
   
   

   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

   
   What is the probability that the market research report will be favorable? If required, round your answer to three decimal places.
   
   P(F) = fill in the blank 4
   
   
4. What is Gorman's optimal decision strategy?
   
   Decision strategy:
   
   If F then 
    
   .
   
   If U then 
    
   .
   
   
5. What is the expected value of the market research information?
   
   Expected value: $  fill in the blank 7
   
   
6. What is the efficiency of the information? If required, round your answer to one decimal place.
   
   Efficiency: fill in the blank 8%