East West Distributing is in the process of trying to determine where they should schedule next year's production of a popular line of kitchen utensils that they distribute. Manufacturers in four different countries have submitted bids to East West. However, a pending trade bill in Congress will greatly affect the cost to East West due to proposed tariffs, favorable trading status, etc.
After careful analysis, East West has determined the following cost breakdown for the four manufacturers (in $1,000's) based on whether or not the trade bill passes:
a.
If East West estimates that there is a 40% chance of the bill passing, which country should they choose for manufacturing?
b.
Over what range of values for the "bill passing" will the solution in part (a) remain optimal?

Question

East West Distributing is in the process of trying to determine where they should schedule next year's production of a popular line of kitchen utensils that they distribute. Manufacturers in four different countries have submitted bids to East West. However, a pending trade bill in Congress will greatly affect the cost to East West due to proposed tariffs, favorable trading status, etc.
After careful analysis, East West has determined the following cost breakdown for the four manufacturers (in $1,000's) based on whether or not the trade bill passes:  ​ 
a.
If East West estimates that there is a 40% chance of the bill passing, which country should they choose for manufacturing?
b.
Over what range of values for the "bill passing" will the solution in part (a) remain optimal?

Quizplus · Accepted Answer

The Answer of East West Distributing is in the process of trying to determine where they should schedule next year's production of a popular line of kitchen utensils that they distribute. Manufacturers in four different countries have submitted bids to East West. However, a pending trade bill in Congress will greatly affect the cost to East West due to proposed tariffs, favorable trading status, etc.
After careful analysis, East West has determined the following cost breakdown for the four manufacturers (in $1,000's) based on whether or not the trade bill passes:  ​ 
a.
If East West estimates that there is a 40% chance of the bill passing, which country should they choose for manufacturing?
b.
Over what range of values for the "bill passing" will the solution in part (a) remain optimal?

East West Distributing Is in the Process of Trying to Determine