Craig Computer Company (CCC) manufactures supercomputers based on parallel processing technology. Next month the firm has scheduled demonstrations for its new Model 4365 with four potential customers....

Craig Computer Company (CCC) manufactures supercomputers based on parallel processing technology. Next month the firm has scheduled demonstrations for its new Model 4365 with four potential customers. This model sells for $725,000 and CCC believes that the probability of each customer purchasing a computer is 30%. The company cannot completely shut down its assembly line over the next month and plans to manufacture at least one computer; it could manufacture as many as four. Production costs for the month are as follows:

Any computers Craig manufactures during a given month but does not sell are exported overseas. Craig receives $500,000 for these computers and can sell as many as it is willing to export. If Craig sells more computers than it manufactures in a month, the customer must wait for delivery. In this case, Craig estimates it loses a total of $30,000 on the sale.

 a. Determine the payoff table for this problem.

 b. What decision alternatives are undominated?

 c. Determine the optimal strategy using the expected value criterion. (Hint: The binomial distribution can be used to determine the probabilities for the states ofnature.)