At the present time, Ken is forced to consider purchasing some more equipment for Brown Oil because… 1 answer below »

Kenneth Brown is the principal owner of Brown Oil, Inc. After quitting his university teaching job, Ken has been able to increase his annual salary by a factor of over. At the present time, Ken is forced to consider purchasing some more equipment for Brown Oil because of competition. His alternatives are shown in the following table:

 

EQUIPMENTFEVORABLE

MARKET

($)UNFEVORABLE

MARKET

($)

Sub

Oiler J

Texan

 

For example, if Ken purchases a Sub and if there is a favorable market, he will realize a profit of. On the other hand, if the market is unfavorable, Ken will suffer a loss of . But Ken has always been a very optimistic decision maker.

 

(a)    What type of decision is Ken facing?

(b)   What decision criterion should he use?

(c)    What alternative is best?

 

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