Question: 3. STUDY the DECISION TREE EXAMPLE PROBLEMS The QPC Company is trying to decide whether to introduce product A or B. The results of their

3. STUDY the DECISION TREE EXAMPLE PROBLEMS

The QPC Company is trying to decide whether to introduce product A or B. The results of their efforts (final sales level) will depend on the speed with which the distributors accept the product (Quick or Slow) and then the type of marketing strategy (Promotion or Advertising) that is chosen.

If they introduce product A the probability of Quick acceptance is expected to be 0.3.

With Quick acceptance, if they then choose a Promotion strategy, the probability of High sales is 0.7 with a payoff of 15 and the probability of Low sales is 0.3 with a payoff of 3.

With Quick acceptance, if they then choose an Advertising strategy the probability of High sales is 0.8 with a payoff of 11 and the probability of Low sales is 0.20 with a payoff of 1.

If the acceptance of product A is Slow and they then choose a Promotion strategy, the probability of High sales is 0.4 with a payoff of 11 and the probability of Low sales is 0.6 with a payoff of 2.

IF acceptance of A is Slow and then an Advertising strategy is chosen, the probability of High sales is 0.7 with a payoff of 9 and the probability of Low sales is 0.30 with a payoff of 1.

If they introduce product B the probability of Quick acceptance is expected to be 0.5.

With Quick acceptance of B, if they then choose a Promotion strategy, the probability of High sales is 0.7 with a payoff of 9, the probability of Low sales is 0.3 with a payoff of 5.

If an Advertising strategy is chosen after Quick acceptance of B, the probability of High sales is 0.8 with a payoff of 8 and the probability of Low sales is 0.20 with a payoff of 4.

If the acceptance of product B is Slow and they then choose a Promotion strategy, the probability of High sales is 0.4 with a payoff of 8, the probability of Low sales is 0.6 with a payoff of 4.

If an Advertising strategy is chosen after Slow acceptance of B, the probability of High sales is 0.7 with a payoff of 6 and the probability of Low sales is 0.30 with a payoff of 3.

Draw a decision tree to illustrate the problem. Remember the tree is drawn from left to right as a time line how the uncertain events and decisions would occur as time goes by
Solve the tree to determine which product should be introduced and which marketing strategy should be used with quick or slow acceptance.
Write out your recommendation.

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