Generate a decision tree to help expando, Operation Management

Assignment Help:

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.


Related Discussions:- Generate a decision tree to help expando

Explain what is a marketing plan, What is a marketing plan? Why is it impor...

What is a marketing plan? Why is it important for firms to develop their product/service marketing plan in writing? What are the essential components of a well-balanced marketing p

Explain what is the risk premium for the payoff, A decision maker has the f...

A decision maker has the following utility function. Payoff Indifference Probability 250 1.00 200 .90 100 .80 50 .50 -50 0 What is the risk premium for

Explain what makes one campaign better than the other, Suppose that a small...

Suppose that a small publisher selling to book distributors has fixed operating costs of $600,000 each year and variable costs of $3.00 per book. How many books must the firm sell

Explain employees explicit rights to free speech, Giving employees explicit...

Giving employees explicit rights to free speech, just cause dismissal, and information are three possibilities for transforming U.S. labour law.

Explain what lessons learned other companies, • What lessons learned other ...

• What lessons learned other companies (in vastly different industries) could take away from the innovative practices at Holden. Provide specific examples to support your response.

Location analysis, explain the series of steps involved and various factor...

explain the series of steps involved and various factor effecting location decion?

Explain why organizational restructuring is needed, Matrix structures allow...

Matrix structures allow for workers to be shared on multiple projects and at a lower than usual cost. Answer To be shared on multiple projects and at a lower than usual cost

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd