Question: = = Que. 3. Beta industries has to decide whether to set up a large plant or a small plant for its new range of

= = Que. 3. Beta industries has to decide whether

= = Que. 3. Beta industries has to decide whether to set up a large plant or a small plant for its new range of refrigerators. A large plant will cost the company Rs. 25 lakhs while a small plant will cost Rs. 12 lakhs. An extensive market survey and a cost profit volume analysis carried out by the company reveal the following:High Demand probability = 0.5Moderate demand probability = 0.3Low demand probability =0.2a) A large plant with high demand will yield an annual profit Rs. 100 lakhs.b) A large plant with moderate demand will yield an annual profit Rs. 60 lakhs.c) A large plant with low demand will lose Rs. 20 lakhs annually because of production inefficiencies.d) A small plant with high demand would yield Rs. 25 lakhs annually, taking into account the cost of lost sales due to the inability to meet demand. e) A small plant with moderate demand would yield Rs. 35 lakhs annually, as the losses due to the lost sales will be lower.f) A small plant with low demand would yield Rs. 45 lakhs annually, as the plant capacity and demand will match.Draw a decision tree and find the optimal solution. (10 Marks) Option 1

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