Question: Stringer Ltd . Management needs to decide regarding the launch of a new product line. The company is considering three options to market the product,
Stringer Ltd Management needs to decide regarding the launch of a new product line. The company is considering three options to market the product, advertise nationally, advertise locally, or dont advertise. Management has identified three states of nature High Demand, Medium Demand, and Low Demand for the product and their expected payoff which is shown in the table below. Pay off in Revenues High Demand Medium Demand Low Demand Decision Advertise Nationally Advertise Locally Do not Advertise aConstruct the appropriate decision tree to help management make the appropriate decisions. The tree must be constructed in a logical order with labels and net profits. b What is the most should management should management be willing to pay to obtain further perfect information EVPI concerning the actual demand
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