Question: A manager is trying to decide whether to build a small, medium, or large facility. Demand can be low, average, or high, with the estimated
A manager is trying to decide whether to build a small, medium, or large facility. Demand can be low, average, or high, with the estimated probabilities being and respectively.
the small facility is expected to earn $ and can be expanded to medium size to earn $ or to large size to earn $
net payoff of $
Choose the correct decision tree below. Note that each payoff is given in thousands $
A
C
D
What should management do to achieve the highest expected payoff?
Enter your response as a whole number.
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