Letz Products has two decisions to make, with the second decision dependent on the outcome of the first. The company intends to build a new plant. Letz has the option of conducting its own marketing research survey for which the results will either be positive or negative. The information from this survey could help it decide whether to build a large plant, to build a small plant, or not to build at all. Letz recognizes that although such a survey will not provide it with perfect information, it may be extremely helpful. Using figure 1 – explain to your client (Letz) what the above decision tree shows. You are required to show all working.
Letz Products has two decisions to make, with the second decision dependent on the outcome of the first. The company intends to build a new plant. Letz has the option of conducting its own marketing research survey for which the results will either be positive or negative. The information from this survey could help it decide whether to build a large plant, to build a small plant, or not to build at all. Letz recognizes that although such a survey will not provide it with perfect information, it may be extremely helpful. Using figure 1 – explain to your client (Letz) what the above decision tree shows. You are required to show all working.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
Letz Products has two decisions to make, with the second decision dependent on the outcome of the first. The company intends to build a new plant. Letz has the option of conducting its own
Using figure 1 – explain to your client (Letz) what the above decision tree shows. You are required to show all working.
Transcribed Image Text:1st decision
point
$49,200
Survey
2nd decision point
Sur. Res.
Pos. (45)
Sur. Res
Neg. (55)
No survey
$106,400
$2,400
$40,000
Large plant
Small $63,600
plant 3
No plant
$106,000
Large plant
No plant
Small $2,400
plant 5
Large plant
Small
plant
No plant
-$87,400
$10,000
6
$40,000
Fav. Mkt (0.78)
Unfav. Mkt (0.22)
Fav. Mkt (0.78)
Unfav. Mkt (0.22)
Fav. Mkt (0.27)
Unfav. Mkt (0.73)
Fav. Mkt (0.27)
Unfav. Mkt (0.73)
Fav. Mkt (0.5)
Unfav. Mkt (0.5)
Fav. Mkt (0.5)
Unfav. Mkt (0.5)
$190,000
-$190,000
$90,000
$30,000
$10.000
$190,000
-$190,000
$90,000
$30,000
$10,000
$200,000
-$180,000
$100,000
$20,000
$0
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.