A company is evaluating the potential of a new product. Pursuing the new product can be implemented fully, partially, or not at all. The success of the new product depends upon consumer acceptance, which can be strong, average, or weak. The table below characterizes the situation.

a. Draw a decision tree to represent this situation.

b. Using decision tree analysis, determine the preferred implementation plan.

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Consumer Acceptance Probability of Occurrence PW of Full Implementation PW of Partial Implementation PW of Do Not Pursue Strong 0.25 $78,000 $51,000 $0 Average 0.60 $28,000 $32,000 $0 Weak 0.15 -$55,000 -$10,000 $0