Question: How to solve ( Subject: operations management ) A firm that plans to expand its product line must decide whether to build a small or

How to solve (Subject: operations management)
A firm that plans to expand its product line must decide whether to build a small or a large facility to produce the new products.
If it builds a small facility and demand is low, the profit will be $405,000. If demand is high, the firm can either maintain the small facility or expand it. The expansion would have a profit of $520,000, and maintaining the small facility would have a profit of $50,000.
If a large facility is built and demand is high, the profit will be $780,000. If demand turns out to be low, the profit will be -$10,000.
The probability that demand will be high is estimated to be 0.70, and the probability of low demand is estimated to be 0.3.
a. Construct a decision tree to select the proper size of plant (3 pts ).
b. What is the expected payoff of building small facility? (1.5 pts)
c. What is the expected payoff of building large facility? (1.5 pts)
d. Which option (building small vs. large facility) should be selected? Why? (1 pts)
 How to solve (Subject: operations management) A firm that plans to

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