Applied decision methods GBA 334

 A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000's) based on the different scenarios faced by the manager.

Alternative           Bid Accepted           Bid Rejected
Buy 1 machine              $10                           $5
Buy 2 machines            $30                           $4
Buy 3 machines            $40                           $2

Using the information above, which alternative should be chosen based on the Laplace criterion?