Problem 16B Decision Tree (10 points) Bill Co provides custom welding fabrication for manufacturing companies. They are currently located in Detroit, Michigan but are considering moving to a new facility in Lima, Ohio. Moving will impact their transportation, labor, and facility costs. Additionally, the economy has been stagnant and may turn to a recession that would negatively impact Bill Co's revenue. The payoff table provided estimates the cost impact related to the location change and three levels of economic change. Create your decision tree integrating the decision node and event node(s) needed to model this decision (you will not be submitting your decision tree). Based on your decision tree complete the recommendation based on average payoff, conservative, and aggressive strategies. For each strategy identify the decision (Detroit or Lima) and the value associated with that decision. Hint: the probability of each event is provided in the payoff table. 1 Problem 16B 3 Bill-Co Costs 15% 40% Slight Moderate Decline Decline $1,150,000 $920,000 $1,265,000 $1,092,500 45% Severe Decline $966,000 $862,500 8 Stay in Detroit 9 Move to Lima Detroit / Lima Value 11 12 ANSWER 13 Average Payoff 14 Aggressive 15 Conservative 16