A company can construct a large facility or small one initially (for a new design). Demand for the new design will be high or low initially. The probability of high demand is 0.7. (The probability of low demand is 0.3.)

If they construct large and demand is high , the payoff is $80 million. If they construct large and demand is low, they can do nothing and payoff is -$15 million, or they can increase prices and payoff is $25 million

If they construct small and demand is low , the payoff is $40 million. If they construct small and demand is high, they can do nothing and payoff is $42 million, or they can expand. If they expand, there is a 35% chance the demand drops off and the payoff will be $35 million, and a 65% chance the demand grows and the payoff is $50 million.

Determine the best decision(s) using a decision tree.

- A company can construct a large facility or small one initially (for a new design). Demand for the new design will be high or low initially. The probability of high demand is 0.7. (The probability of low demand is 0.3.) - If they construct "large" and demand is "high", the payoff is $80 million. If they construct "large" and demand is "low", they can do nothing and payoff is $15 million, or they can increase prices and payoff is $25 million - If they construct "small" and demand is "low", the payoff is $40 million. If they construct "small" and demand is "high", they can do nothing and payoff is $42 million, or they can expand. If they expand, there is a 35% chance the demand drops off and the payoff will be $35 million, and a 65% chance the demand grows and the payoff is $50 million . Determine the best decision(s) using a