ABC Company has several branches within the city. One of its branches is suffering from declining sales, and management has a range of options: a. Shut down the branch and sell for P5M b. Undertake a major renovation c. Undertake a cheaper renovation In the past, 2/3 of renovation have achieved good results, while 1/3 achieved poor results. The major renovation will cost P4M. Estimates of outcomes are as follows: a. Good results: P13.5M profit b. Poor results: P6.5M profit On the other hand, there is a more economical renovation option that costs P2M. Estimates of outcomes are as follows: a. Good results: P8.5M profitb. Poor results: P 4M Required: Prepare a decision tree and recommend what action would be taken: a. Shut down the branch and sell for P5M b. Undertake a major renovation c. Choose the economical option
ABC Company has several branches within the city. One of its branches is suffering from declining sales, and
management has a range of options:
a. Shut down the branch and sell for P5M
b. Undertake a major renovation
c. Undertake a cheaper renovation
In the past, 2/3 of renovation have achieved good results, while 1/3 achieved poor results. The major renovation
will cost P4M. Estimates of outcomes are as follows:
a. Good results: P13.5M profit
b. Poor results: P6.5M profit
On the other hand, there is a more economical renovation option that costs P2M. Estimates of outcomes are
as follows:
a. Good results: P8.5M profitb. Poor results: P 4M
Required: Prepare a decision tree and recommend what action would be taken:
a. Shut down the branch and sell for P5M
b. Undertake a major renovation
c. Choose the economical option
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