Question: Capacity planning in a more uncertain future environment utilizes decision trees. Suppose Alcor Clean Air Products is not quite sure of the demand for its

Capacity planning in a more uncertain future
Capacity planning in a more uncertain future
Capacity planning in a more uncertain future environment utilizes decision trees. Suppose Alcor Clean Air Products is not quite sure of the demand for its product (high or low) and must decide on whether to build a small or large plant. The likelihood of demand being high is 70% while the chance of demand being low is 30%. Payoffs for different alternvatives are given in the decision tree that follows: Probabesti Decision High Demand 70 Payoff5300,000 Small Capacity Low Demand Payoff $150,000 Large Capacity High Demand- 70 Payot 5000,000 Low Domand- 30 Payol-5100.000 What is the expected payoff of building a small facility? O $255,000 $195,000 O $450,000

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