Appendix A Case Study: Jepsis Sudbury Snack Factory You are an Operations Manager at a food and beverage company called JepsiCo, Inc (Jepsi). You have been tasked to come up with a proposal for what to do with the snack factory located in Sudbury, Ontario, for the next eight years. The snack factory currently produces bags of pretzels, chips, and popcorn for sale to grocery stores, venues, restaurants, and convenience stores in Ontario. Based on product demand, factory utilization has been around 80% for the past three years. You are evaluating three alternatives for the Sudbury snack factory: the first is to undergo minor upgrades to the factory to expand product range and increase factory utilization to 100%, the second is to do a complete overhaul of the factory to change the production over the beverages, and the third is the status quo (do nothing). The assumptions and conditions are as follows: There is a 22% probability of strong growth in the sales of snacks and beverages; a 50% probability of normal growth; and a 28% probability of weak growth. If utilizing 100% of the factory capacity for snacks: strong growth will result in annual returns of $200,000; normal growth will result in annual returns of $150,000; and weak growth will result in annual returns of $120,000. If overhauling the factory to produce beverages: strong growth will result in annual returns of $450,000; normal growth will result in annual returns of $250,000; and weak growth will result in annual returns of $120,000. If utilizing 80% of the factory capacity for snacks: strong growth will result in annual returns of $160,000; normal growth will result in annual returns of $120,000; and weak growth will result in annual returns of $96,000. The minor upgrades would cost $181,000; the plant can continue to operate at current production levels during the upgrades. The increase in factory utilization will only be seen after the upgrades are complete. Upgrades will take 12 months to complete. The complete overhaul would cost $1,205,000, and the plant would need to be shut down for one year for the work to happen. Operating costs for all options are equal and assume a 18% interest rate. To determine which is the best alternative, answer the questions below. Questions 1. Construct a decision tree that considers all of the alternatives. For example, you must use squares to represent decision points and circles to represent chance events. 2. Calculate the values of each alternative outcome, considering results over an eight-year period. Show your work in a table format similar to the one shown below. Then, calculate the value of each alternative.

Alternative	Revenue	Cost	Value

3. Calculate the net present value of each alternative outcome, considering results over an eight-year period. Show your work in a table format similar to the one shown below. Then, calculate the value of each alternative using the net present value.

Alternative	Revenue	Cost	Value

Please provide accurate results