Applied Decision Methods
A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager. Alternative Bid Accepted Bid Rejected Buy 1 machine $10 $5 Buy 2 machines $30 $4 Buy 3 machines $40 $2 Using the information above, which alternative should be chosen based on the Laplace criterion?