The chief executive officer of a car battery company must decide which one of three new types of batteries to produce. The fixed and variable costs of each battery are shown in the accompanying table....

The chief executive officer of a car battery company must decide which one of three new types of batteries to produce. The fixed and variable costs of each battery are shown in the accompanying table.

The CEO believes that demand will be 50 000, 100 000 or 150 000 batteries, with probabilities 0.3, 0.3 and 0.4, respectively. The selling price of the battery will be $40.

a Determine the payoff table.

b Determine the opportunity loss table.

c Find the expected monetary value for each act, and select the optimal one.

d What is the most the CEO should be willing to pay for additional information about demand?