Question: A manager is trying to decide whether to build a small, medium, or large facility. Demnand can be low, average, or high, with the estimated


A manager is trying to decide whether to build a small, medium, or large facility. Demnand can be low, average, or high, with the estimated probabilities being 0.25, 0.40, and 0.35, respectively. A small facility is expected to eam an after-tax net present value of just $32,000 if demand is low. If demand is average, the small facility is expected to earn $45,000; it can be increased to medium size to earn a net present value of $50,000. If demand is high, the small facility is expected to earn $50,000 and can be expanded to medium size to earn $70,000 or to large size to earn $135,000. A medium-sized facility is expected to lose an estimated $50,000 il demand is low and earn $90,000 if 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 $165,000. If a large facility is built and demand is high, carnings are expected to be $170,000. If demand is average for the large facility, the present value is expected to be $80,000; if demand is low, the facility is expected to lose $70,000. Choose the correct decision tree below. Note that each payoff is given in thousands ($000). OA OB. Q Q High $170 ling Do nothing Ecando 19 $166 $100 $ a Ecards $155 E Ang 40 -$80 025-30 Low 11 25 $70 LAND High 0.20 1 Med Pop 6.40 $90 M M -Low LOW 0.25 - $50 High 0.39 | Smal Arg 0.40 De nothing $100 Ecard $135 Expand medge Der SC Expresso De R$45 High May 6.41 300 -$ Low 11 25 -$70 Lara High 0.30 $170 1 Mad Mp4.40 $90 - Low 0.25 - $50 High30 Smal Arg0.40 Ecard19 5135 $ Expand x medge DO $80 Espesso $45 25 $32 LO 025 332 OC. OD High $170 e Arg A580 Expanding High 3170 0.1 : $ Low 13h 370 LAND High 0.20 Med Mp 6.40 $40 - z S60 Aeg 11 411 Law 1125 370 Il Lang Hoho. 39 | 1 Mcd Mg0.40 $40 Expand 19 5166 $185 $ Do nothing $100 Do nothing $100 OA. . Q High 0.35 Expand to 5165 De nothing S100 ing e Low 078-$70 High 0.36 $170 Avg 0.40 san 25 $ Large High 0.35 ved Aug 0.40 $90 1 $ Expand to 19 3165 LH Ang 0.40 $80 LO 0.25 - $70 Largo High 0353170 1 Med Avy 0.40 LOWO.ZA $50 $90 Lox 0.25 $50 High as Smal High 0.3 De nothing $100 Expand to $135 Expend to med 570 $50 Expertos De nothing $45 w Do nothing Small Expand to 19 $135 Expand to med $70 De nothing $50 Expand to me 50 Do nothing $45 Avg 0.40 Low 0.25 532 Avg 0.40 Low 0.25 $s2 $ OC. OD a a High 0.25 $170 High 0.35 $170 Avg 040 580 Low O 25 - $70 Q Avy 0.40 $80 Expand tong $165 Low 0.36 $70 Expand to $165 Large $ z SAD 0.25 High 0.35 $90 $50 High 0.35 1 Metz Aug 0.40 Low 025 - SSD Large High 0.25 Mad Avg 0.40 1 $ LH 0,35 $ Small High 0.25 Aug 0.40 590 Low 0.36 550 Do nothing 3100 Expand tar $135 Expand to mad $70 De nothing Experto med $50 Do nothing $45 Smal Do nothing $100 Expand to g. 5135 Expand to mad $70 Do nothing $50 Expand to messo Do nothing 345 $ $50 Ang 0.40 Aug 0.40 Low 0 25 532 $ Low 0.26 32 $ What should management do to achieve the highest expected payoff? The management should build a in order to achieve the highest expected payoff of $. (Enter your response as a whole number.) ()