The Gorman Manufacturing Company must decide whether it should purchase a component part from a supplier or manufacture the component at its Milan, Michigan plant. If demand is high, it would be to Gorman’s advantage to manufacture the component. However, if demand is low, Gorman’s unit manufacturing cost will be high due to under-utilization of equipment. The projected profit in thousands of dollars for Gorman’s make or buy decision is shown below.
Low Demand Moderate Demand High Demand
Manufacture -$25 $40 $100
Purchase $10 $45 $70
Construct the regret table. Solve for minimax regret.