Question: Problem 1: Arktec Manufacturing must choose between two capacity options, shown below: Fixed cost (per year) Variable cost (per unit) Option 1 $500,000 $2 per

Problem 1: Arktec Manufacturing must choose

Problem 1: Arktec Manufacturing must choose between two capacity options, shown below: Fixed cost (per year) Variable cost (per unit) Option 1 $500,000 $2 per unit Option 2 $100,000 $10 per unit Suppose the company has identified three possible demand scenarios: Demand (per year) Probability 25,000 units 30% 60,000 40% 100,000 30% Draw the Decision Tree and find the expected value of each option? Which option would you choose, based on this information

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