Assignment Problem: You are the manager of a national chocolate distributor. Your largest customer has been asking for a new chocolate bar that has been gaining popularity in Europe. Your customer will most likely offer you a one-year contract for supplying the chocolate bars to them. You have to make a decision within a week to outsource or not. If you do not outsource, you can earn $150,000 with certainty. You realize that there is risk inherent with outsourcing. One such risk is higher duties on organic products. You have conducted some research and determined that financial experts are predicting a 50% chance that new duties will be imposed in the near future. There is a 30% chance that duties will stay the same as now. There is a 20% chance that duties will be eliminated. If new duties are imposed, you will break even on your venture. If duties stay the same, you can earn $200,000. If duties are eliminated, you can earn $300,000. You remember learning of a technique to help you make a decision within the next hour, and determined that is best to:
a) not outsource and break even
b) outsource
c) outsource and pay duties
d) not outsource