Karen Villagomez, president of Wright Industries, is considering whether to build a manufacturing plant in the Ozarks.
Question:
(a) Construct a decision tree.
(b) Determine the best strategy using expected monetary value (EMV).
(c) What is the expected value of perfect information(EVPI)?
Transcribed Image Text:
Favorable Market $400,000 S 80,000 Unfavorable Market $300,000 10,000 Alternatives Build large plant Build small plant Don't build Market probabilities 0.4 0.6
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All dollar values are in 1000s a b Based on the expected monetary value criterion Karen sho...View the full answer
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