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
A manager is trying to decide whether to build a
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 0.40.0.35, and 0 25 respectively A small facility is expected to earn an alter-tax net present value of just $14.000 If demand is low. If demand is coverage, the small facility is expected to a $15,000, con be increased to medium size to earn a not present value of $70,000. demand is high the smal facility is expected to cam $25.000 and can be expanded to medium size to sam 570,000 or to large size tocar 575.000 A medium-sized facility is expected to lose an estimated $25,000 il demand is low and eam 500.000 demand is average. If demand is high, the medium-sized facility is expected to earn a net present value of $100,000; it can be expanded to a large size for a net payoff of $125,000 If a large facility is built and demand is high. camnings are expected to be $160,000. It demand is average for the large facility, the present value is expected to be 500.000 demand is low, the facility is expected to lose $40,000 Choose the correct decision tree below. Note that each payoff is given in thousands (8000) . OB. 100 1135 040 $180 AD Cow 035 300 -540 HA 640 MA -525 A055 LOR 0 -540 HOM 10 -125 1100 179 C30 5125 ON E 575 70 325 En $70 Dong 115 110 14 OD c 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 0.40.0 35, and 0 25. respectively A small facility is expected to earn an after-tax net present value of just $14.000 i demand is low. If demand is average the small facility is expected to earn $15,000, con be increased to medium size to earn a not present value of $70,000. demand is high, the smal facility is expected to cam $25.000 and can be expanded to medium size to sam 570,000 or to large size tocam $75.000 A medium-sized facility is expected to lose an estimated $25,000 il demand in low and eam 500.000 demand is average. If demand is high, the medium-sized facility is expected to earn a net present value of $100,000; it can be expanded to a large size for a net payoff of $125,000 If a large facility is built and demand is high.canings are expected to be $160,000. Il demand is average for the large taclity, the present value is expected to be $80.000 demand is low, the facility is expected to lose $40.000 Choose the correct decision tree below. Note that each payoff is given in thousands (5000) . . ADS 055 LOR 100 -10 40 $180 CO 035 500 -540 040 AD 5.25 1135 3500 1100 179 C30 $125 O ER 575 $70 $25 Eet -370 bong 15 AD 10 - 125 HO 100 3:10 AVO 14 OD c

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