Construct a decision tree for lotell

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Reference no: EM131374936

LOTell, a telephone company, has two options for its new internet service package: it can introduce a combined rate for the residential phone line and the internet access or it can offer various add-on internet service rates in addition to the regular phone rate. LOTell can only afford to introduce one of the packages at this point. The expected gain in market share by introducing the internet service would likely differ for different market growth rates. LOTell has estimated that if it introduces the combined rate, it would gain 30%, 15%, and 3% of the market share with rapid, steady, or slow market growth. If it introduces the add-on rates, it gains 15%, 10%, and 5% of the market share with rapid, steady or slow market growth.

(a) Construct a decision tree for LOTell. If it wishes to maximize expected market share growth, which package should LOTell introduce to the market now?

(b) Can either the combined rate or the add-on rate alternative be eliminated from consideration due to dominance reasoning?

Reference no: EM131374936

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