Please do not give solution in image format thanku 2. Kroft Food Products is attempting to decide whether it should introduce a new line of saladdressings called Special Choices. The company can test market the salad dressings in selectedgeographic areas or bypass the test market and introduce the product nationally. The cost ofthe test market is $150,000. If the company conducts the test market, it must wait to see theresults before deciding whether to introduce the salad dressings nationally. The probability ofa positive test market result is estimated to be 0.6. Alternatively, the company can decide notto conduct the test market and go ahead and make the decision to introduce the dressings ornot. If the salad dressings are introduced nationally and are a success, the company estimatesthat it will realize an annual profit of $1.6 million, whereas if the dressings fail, it will incur aloss of $700,000. The company believes the probability of success for the salad dressings is0.50 if they are introduced without the test market. If the company does conduct the testmarket and it is positive, then the probability of successfully introducing the salad dressingsincreases to 0.8. If the test market is negative and the company introduces the salad dressingsanyway, the probability of success drops to 0.30.Using decision tree analysis, determine whether the company should conduct the test market.

A decision tree is a graphical representation of decision-making under uncertainty. It is a tool…

Answered: Using decision tree analysis, determine…

Business

Operations Management

Using decision tree analysis, determine whether the company should conduct the test market.

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...

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