HanesBrands based in Winston-Salem, NC is deciding between Spain and Poland for the location of a...

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HanesBrands based in Winston-Salem, NC is deciding between Spain and Poland for the location of a new production facility that will serve its growing European market. The annual fixed cost in Spain is $3.0 million and the profit margin per unit produced is $16. The annual fixed cost in Poland is $5.0 million and the profit margin per unit produced is $28. At either location, the facility will be designed to have an annual capacity of 440,000 units per year. The projected annual demand to be fulfilled by the facility is 426,000 units. Hanes is concerned about the risk of a labor strike affecting production in either location. In Spain, the probability of a labor strike is 25%. In Poland, the probability of a labor strike is 12%. If a labor strike occurs at either location, production capacity will decrease by 103,000 units per year. Otherwise, production is unaffected. Draw a decision tree to analyze this problem. Calculate the expected annual profit if the facility is located in Spain. Calculate the expected annual profit if the facility is located in Poland. Which of the two options does Hanes prefer? Enter the absolute difference between the expected annual profits of the two options. Carry all calculations to at least 3 decimal places. Enter your final answer in dollars rounded to the nearest dollar. HanesBrands based in Winston-Salem, NC is deciding between Spain and Poland for the location of a new production facility that will serve its growing European market. The annual fixed cost in Spain is $3.0 million and the profit margin per unit produced is $16. The annual fixed cost in Poland is $5.0 million and the profit margin per unit produced is $28. At either location, the facility will be designed to have an annual capacity of 440,000 units per year. The projected annual demand to be fulfilled by the facility is 426,000 units. Hanes is concerned about the risk of a labor strike affecting production in either location. In Spain, the probability of a labor strike is 25%. In Poland, the probability of a labor strike is 12%. If a labor strike occurs at either location, production capacity will decrease by 103,000 units per year. Otherwise, production is unaffected. Draw a decision tree to analyze this problem. Calculate the expected annual profit if the facility is located in Spain. Calculate the expected annual profit if the facility is located in Poland. Which of the two options does Hanes prefer? Enter the absolute difference between the expected annual profits of the two options. Carry all calculations to at least 3 decimal places. Enter your final answer in dollars rounded to the nearest dollar.

Answer rating: 100% (QA)

To analyze this decision problem lets start by drawing a decision tree 1 Decision Node Location Deci... View the full answer