ASAP // Solve this one by hand writing ( decision tree is needed ) and upload here do part (i) (ii) (iii) only Set up this project as a decision tree to find whether the manufacturer should approve this project, and if so, which method of production to use to maximize profit. Hint: compare the total annual costs as the sale will be fixed irrespective of the method used (i.e., we assume the production must meet all demand and hence each unit demanded and sold results to more profit). Show your working clearly by adopting the following steps given below (i) Compute the annual costs for each year and for each of the three methods. If possible summarise your results in a table. [10] (ii) Construct the decision tree with all necessary information provided [15] (iii) Summarise your results and suggest your solution

3. The yearly demand for a seasonal, profitable item for the next four years follows the distribution given below: A manufacturer is considering launching a project to produce this item by one of the following three methods. a- Use existing tools at a cost of $6 per unit b- Buy cheap, special equipment for $1,000 each year. The value of the equipment at the end of the year (salvage value) is zero. The cost per unit will be reduced by $3 (from the original \$6). c- Buy a high-quality, special equipment for $10,000 once that can be depreciated over four years (i.e., with zero salvage value at the end of fourth year). Consider the cost to be equally spread over the four years (i.e., one fourth of the cost each year). The cost with this equipment would be only $2 per unit. Set up this project as a decision tree to find whether the manufacturer should approve this project, and if so, which method of production to use to maximize profit. Hint: compare the total annual costs as the sale will be fixed irrespective of the method used (i.e., we assume the production must meet all demand and hence each unit demanded and sold results to more profit). Show your working clearly by adopting the following steps given below (i) Compute the annual costs for each year and for each of the three methods. If possible summarise your results in a table. [10] (ii) Construct the decision tree with all necessary information provided (iii) Summarise your results and suggest your solution [5]