An electronics manufacturer is considering expansion of its plant in the next 4 years. The decision depends on the increased production that will occur if either government or consumer sales increase. Specifi cally, the plant will be expanded if either (1) consumer sales increase 50 percent over the present sales level or (2) a major government contract is obtained. The company also believes that both these events will not happen in the same year. The planning director has obtained the following estimates: The probability of consumer sales increasing by 50 percent within 1, 2, 3, and 4 years is 0.05, 0.08, 0.12, and 0.16, respectively. The probability of obtaining a major government contract within 1, 2, 3, and 4 years is 0.08, 0.15, 0.25, and 0.32, respectively What is the probability that the plant will expand (a) Within the next year (in year 1)? (b) Between 1 and 2 years from now (in year 2)? (c) Between 2 and 3 years from now (in year 3)? (d) Between 3 and 4 years from now (in year 4)?
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