Reference no: EM132952404
Store-It-All is a new budget storage facility Due to the well-priced options, they facility has been popular with customers in need of storage space so Store-It-All is considering increasing its capacity. Store-It-All has the following three options: build a new facility, expand the current facility, or do nothing. Based on a market analysis, there is a 30% chance of a strong market, a 55% chance of a stable market, and a 15% chance of a weak market. Based on significant data analysis, Store-It-All estimates the following annual returns for these alternatives:
Strong Market Stable Market Weak Market
New Facility $980,000 $(180,000) $(45,000)
Expand Current Facility $630,000 (50,000) (95,000)
Do Nothing 170,000 0 (40,000)
?USE THE DRAWING TOOLS IN WORD OR POWERPOINT (OR EXCEL ADD-IN TREEPLAN), CREATE AND SOLVE THE DECISION TREE. UPLOAD THE FILE CONTAINING THE SOLUTION HERE.
a. Use a decision tree analysis to analyze these decision alternatives.
b. What should the Store-It-All?
c. What would their expected annual returns if your recommendation is followed?