Little Trykes is considering offering a toy scooter that it will sell for $20 each. The company has two production options:  (i) Manufacture the scooters in their existing facilities.  (ii) Import the...

Little Trykes is considering offering a toy scooter that it will sell for $20 each. The company has two production options:

 (i) Manufacture the scooters in their existing facilities.

 (ii) Import the scooters from overseas Little Trykes believes that the demand for the scooters will be between 100 and 300 units per day and has decided to model the situation as a decision analysis problem with three states of nature: demand =100 units per day; demand = 200 units per day; and demand = 300 units per day. This was done because the company will either manufacture or import the units in lot sizes that are multiples of 100. The following table gives the per unit costs for the two production options.

If the company decides to import the scooters, there is a 30% chance that a tariff of $2 per unit will be imposed on the scooters. The company will learn whether there is a tariff only after it has made its decision on the source of its scooter production. The amount produced or imported will correspond to daily demand. The probability distribution for daily demand with no advertising versus spending $1000 a day on advertising is as follows:

Determine Little Trykes’s optimal course of action regarding manufacturing, importing, and advertising the scooters.