Question: A manager is trying to decide whether to buy one machine or bwo. If only one machine is purchased and demand proves to be axcessive,

A manager is trying to decide whether to buy one machine or bwo. If only one machine is purchased and demand proves to be axcessive, the sefobnd machine can be. purchased later, Some sales would be lost, howtver, because the le ad lime for delivery of this bype of machine it siot montha: In addition, the cost per machine will be lowne if both machines are purchased at the same time. The probability of low demand is estimated to be 0.30 and that of high demand to be o. 7o. The afiectax NFV of the benelis trom purchasing two machinet legether is 570,000 t demand is low and $190,000 it demand ia high. If one machine is purchased and demand is low, the NPV is 5120.000. If demand is high, the manager has three opitiors: (1) doing fothing. which has an NPV of. \$110.000. (2) subcontrecting. with an NPY of 5150.000; and (3) buying the second machine, with an NEV of 5120.000. a. Choose the correct decisicn tree for this problem. Note that each payoff is given in thousands of dollars. b. What is the best decision and what is its expected payoff? Best decision is to buy machine(s) and its expected pryof is 3 (Enter your responses as integers.)
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