Container Company ​

Container Company ​
A company must decide whether or not to change its packaging to a more environmentally safe material.The impact of the decision on profits depends on which of the following three possible scenarios develops in the future. ​ Scenario 1: The media does not focus heavily on concerns about packaging and no new laws requiring changes in packaging are passed.Under this scenario,the company will make $35 million if they change their packaging now,but will make $75 million if they do not change their packaging now. ​ Scenario 2: The media does focus heavily on concerns about packaging and no new laws requiring changes in packaging are passed.Under this scenario,the company will make $50 million if they change their packaging now,but will make $55 million if they do not change their packaging now. ​ Scenario 3: The media does focus heavily on concerns about packaging and new laws requiring changes in packaging are passed.Under this scenario,the company will make $60 million if they change their packaging now,but will make only $15 million if they do not change their packaging now. ​ The prior probabilities of the three scenarios are 0.3,0.5,and 0.2,respectively. ​ ​
-{Container Company Narrative} Which decision has the minimum expected opportunity loss?

Correct Answer:

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EOL (a₁)= (0.3)(40)+ (0.5)(5)+ (0.2)(0)= ...

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