Construct decision tree to help expando make best decision

Assignment Help Operation Management

Reference no: EM13961664

Decision Tree Problem: Expando, Inc. is considering the possibility of building an additional factory that would produce a new addition to their product line. The company is currently considering three alternatives: build small plant, build large plant, and do nothing. If the company builds the small plant and the demand for the new product is low, then the company expects to receive $10 million in discounted revenues (present value of future revenues) and incur $7 million in discounted costs (initial construction costs plus present value of future cost). If the company builds the small plant and the demand for the new product is high, then the company expects to receive $12 million in discounted revenues and incur $8 million in discounted costs. If the company builds the large plant and the demand for the new product is low, then the company expects to receive $10 million in discounted revenues and incur $9 million in discounted costs. If the company builds the large plant and the demand for the new product is high, then the company expects to receive $14 million in discounted revenues and incur $10 million in discounted costs. If the company does nothing, then no additional revenue would be generated nor additional cost incurred because the current factories cannot produce these new products. Regardless of what alternative the company implements, the probability of demand for the new product being high is 0.40 and the probability of demand for the new product being low is 0.60. Construct a decision tree to help Expando make the best decision. What is the best decision?

Reference no: EM13961664

Questions Cloud

Find tb, the magnitude of the tension in string b : If the mass of the block is too large and the block is too close to the left end of the bar (near string B) then the horizontal bar may become unstable (i.e., the bar may no longer remain horizontal). What is the smallest possible value of x such t..

Describe the educational setting: staff development : Describe the educational setting: staff development, patient education, family education, and so forth. Include learner assessments: educational level, developmental level, readiness to learn, and so forth.

Five year violent crime offense figure : Did anything about the Five Year Violent Crime Offense Figure surprise you? Think about the information you hear regarding violent crime every day from all forms of the news media, social web site platforms and just in talking to your friends, fami..

What is the relationship between the history of the hearsay : 1. What is the relationship between the history of the hearsay rule and the history of the trial by jury? 2. What is the rationale for allowing some confessions into evidence even though the confessions are hearsay? Do you believe such evidence sho..

Construct decision tree to help expando make best decision : Decision Tree Problem: Expando, Inc. is considering the possibility of building an additional factory that would produce a new addition to their product line. Construct a decision tree to help Expando make the best decision.

Several broad instructional goals for educational experience : Submit your instructional unit, which should include three lesson plans: one focused on patient education, one on family education, and one on staff development. Remember, your plans should demonstrate a logical approach to teaching, communicate w..

Discuss the merits of this argument : The rationale for this is that a large hedge fund, on its own, could pose systemic risk to the financial system. Discuss the merits of this argument.

Problem regarding the roots of the scalar equation : All the roots of the scalar equation x-4sin(2x)-3=0, are to be determined with at least 10 accurate digits, (n accurate digits is equivalent to a relative error smaller than 0.5 x 10^-n)

User Account

All Pages