Question: Aretailer must decide whether to build a small or a large facility at a new location Demand at the location can be either low or

Aretailer must decide whether to build a small or
Aretailer must decide whether to build a small or a large facility at a new location Demand at the location can be either low or his with probabilities estimated to be 0.4 and 06 respectively. If a small facility is built and demand proves to be hich, the manager may choose not to expand (payott - $223.000) or to expand (yoff - $270.0001, If a small facility h built and demand is low there is no reason to expand and the payoft is $200,000. If a large facility is built and demand proves to be low, the choice is to do nothing (540.000) or to stimulate demand through local advertising. The response to advertisin may be either modest or sizeable, with the probabilities estimated to be 0.3 and 0.7 respectively. If it is modest, the wolf is estimated to be only $20,000, the payoff grows to $220,000 if the response is stable. Finally, a tare facility is built and demand turns out to be hich the payoff is $400.000 Draw a decision tree IL Fornachdecision mode determine the expected volt. 112m State with reason which option the retailer should 12

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