Decision tree to make best decision

Assignment Help Operation Management

Reference no: EM13108522

Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to its product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $6 million. If demand for new products is low, the company expects to receive $10 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects $12 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $9 million. Were demand to be low, the company would expect $10 million in discounts revenues with the large plant. If demand is high the company estimates that the discounted revenues would be $14 million. In either case, the probability of demand being high is .40, and the probability of it being low is .60. Not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products. Construct a decision tree to help Expando make the best decision.

Reference no: EM13108522

Questions Cloud

How many business majors required to evaluate mean salary : How many business majors would be required to evaluate mean salary to within 10 with 95% confidence if population standard deviation is %200.

Determine the annual ordering and annual carrying costs : A computer-supply mail order house has a memory chip in inventory that it sells to customers around the country. A Japanese manufacturer supplies the item using airfreight.

How data point significant difference between two treatments : Second treatment had M = 52 with s^2 = 36. Do these data point to significant difference between two treatments? Use the two-tailed test with α = .05.

Externalities of education : Use technology and information resources to research economic problems and issues and write clearly and concisely about economic problems and issues using proper writing mechanics.

Decision tree to make best decision : Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to its product line. The company is currently considering two options.

How about male attraction to healthy youthful women : How would an evolutionary psychologist explain differing levels of physical aggression in males and females?

Scientific method in practice : Choose a research article from your field.Write the five hypotheses that this study is testing.Write both the null and alternative hypotheses for each one.

Describe an independent groups experimental approach : Be sure to operationally define both your Independent Variable and your Dependent Variable. Give enough detail to convey your research method. Be sure that you are specifying the comparison that could be made to test this hypothesis.

How larger variability impact size of standard error sample : In part b, sample have greater variability than part a, but sample sizes are unchanged. How does larger variability influence size of standard error for sample mean?

User Account

All Pages