Maximize the designer expected pro?ts

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Suppose that if the designer starts working on long designs, she can change them to medium designs after the prevailing style for the sea- son becomes known-although she must then pay a price for this change because of delays in delivery to manufacturers. In particular, if the designer chooses long and the prevailing style is medium, and she then chooses to change to medium, there is a 0.30 chance that her pro?ts will be $200,000 and a 0.70 chance that her pro?ts will be $600,000. No other change from one style to another is possible. Incorporate this information in your decision tree of problem 15-26, and solve the new tree. Give a complete solution in the form of a pair of decisions under given circumstances that maximize the designer's expected pro?ts.

Reference no: EM13968788

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