7. Suisan Fish Company must decide whether to build a small or a large warehouse at a new location, Kona. Demand at Kona can be either low or high, with probabilities estimated to be 0.3 and 0.7, respectively. If a small warehouse is built, and demand is high, the fish manager may choose to maintain the current size or to expand. The net present value of profits is $223,000 if the company chooses not to expand. However, if the firm chooses to expand, there is a 40% chance that the net present value of the returns will be $330,000 and a 60% chance the estimated net present value of profits will be $210,000. If a small warehouse is built and demand is low, there is no reason to expand and the net present value of the profits is $220,000. However, if a large warehouse is built and the demand turns out to be low, the choice is to do nothing with a net present value of $30,000 or to stimulate demand through local advertising. The response to advertising can be either modest wvith a probability of 3 or favorable with a

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Purchase Process

Purchasing refers to the act of procurement of products or services from a market of resources. The procedures used to accomplish the acquisition of the requisite resources are referred to as the purchasing process. Consumer behavior, customer strategy, product pricing, consumer necessity, and other variables are various parts of the process.