1) Tesla's decision to produce a new line of compact and full-sized cars in China resulted in the need to construct either a small plant or a large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium, or high. The following payoff table shows the projected profit in millions of dollars: Long Run Demand Plant size Low Medium High Small 20 60 90 Large -50 100 120 a. Construct an influence diagram. (pay attention to the standard shapes used in influence diagrams)| b. Construct a decision tree. c. Recommend a decision based on the use of the i) optimistic ii) conservative
1) Tesla's decision to produce a new line of compact and full-sized cars in China resulted in the need to construct either a small plant or a large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium, or high. The following payoff table shows the projected profit in millions of dollars: Long Run Demand Plant size Low Medium High Small 20 60 90 Large -50 100 120 a. Construct an influence diagram. (pay attention to the standard shapes used in influence diagrams)| b. Construct a decision tree. c. Recommend a decision based on the use of the i) optimistic ii) conservative
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:1) Tesla's decision to produce a new line of compact and full-sized cars in China resulted in the need to construct
either a small plant or a large plant. The best selection of plant size depends on how the marketplace reacts to the
new product line. To conduct an analysis, marketing management has decided to view the possible long-run
demand as low, medium, or high. The following payoff table shows the projected profit in millions of dollars:
Long Run Demand
Plant size
Low
Medium
High
Small
20
60
90
Large
-50
100
120
a. Construct an influence diagram. (pay attention to the standard shapes used in influence diagrams)||
b. Construct a decision tree.
c. Recommend a decision based on the use of the
ј) optimistic
ii) conservative
iii) minimax regret approaches.
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