Use a decision tree to determine the best introduction strategy for the product from the

standpoint of EMV. State the optimal policy and its EMV.

Q1: Product rollouts Your firm has developed a new product aimed at the European and Asian markets. For each of these two markets, you have identified two possible sales scenarios, called "good" and "bad", with the following probabilities: Asia Good Asia Bad Europe Good Europe Bad 0.55 0.15 0.20 0.10 That is, there is a 55% chance the products sales will be good in Asia and Europe, a 15% chance they will be good in Asia but bad in Europe, and so forth. You have four possible courses of action: Introduce the product simultaneously in Europe and Asia Introduce it in Asia first. After it becomes apparent whether sales are good or bad, decide whether to introduce it in Europe, one year later. Introduce it in Europe first. After it becomes apparent whether sales are good or bad, decide whether to introduce it in Asia, one year later. Abandon the product. The NPV's of the various scenarios are as follows, in millions of US dollars: Immediate Introduction After one year Good Bad Good Bad Asia +120 -205 +117 -205 Europe +105 -200 +102 -200 For example, "good" sales in Asia mean an NPV of $120 million if the product is introduced in this year, and $117 million in the product is introduced next year. In either year, "bad" sales mean an NPV of-$205 million. The information for Europe should be interpreted similarly