How do I set up this Payoff Table?
Asked Feb 24, 2012, 09:18 AM
A maker of T-shirts must decide to build a large plant or a small plant. A small plant will incur an annual cost of $400000, with a production capacity of 100000 T-shirts per year. A large factory will incur an annual cost of $800000, with a production capacity of 200000 T-shirts per year. The profit per T-shirt is estimated as $20. Four levels of manufacturing demand are considered likely: 20000, 40000, 100000, and 200000 T-shirts per year. What formula is used to compute the payoff table?