Course of action afc should follow in launching new product

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Reference no: EM13782017

AFC is about to launch its new Wings N Things fast food nationally. The research department is convinced that Wings N Things will be a great success and wants to introduce it immediately in all AFC outlets without advertising. The marketing department sees things differently and wants to unleash an intensive advertising campaign. The advertising campaign will cost $100,000, and there is a 70% chance it will be successful with $950,000 revenue. If the campaign is unsuccessful, estimated revenue will drop to $200,000. If no advertising is used, the revenue is estimated at $400,000 with probability .8 if customers are receptive to the new product and $200,000 with probability .2 if they are not.

Draw the associated decision tree and decide what course of action AFC should follow in launching the new product.

Please show all work and calculations

Reference no: EM13782017

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