A Company Is Planning a Plant Expansion $\quad$ $\quad$

question 69

Essay

A company is planning a plant expansion. They can build a large or small plant. The payoffs for the plant depend on the level of consumer demand for the company's products. The company believes that there is a 72% chance that demand for their products will be high and a 28% chance that it will be low. The company can pay a market research firm to survey consumer attitudes towards the company's products. There is a 76% chance that the customers will like the products and a 24% chance that they won't. The payoff matrix and costs of the two plants are listed below. The company believes that if the survey is favorable there is an 87% chance that demand will be high for the products. If the survey is unfavorable there is only a 25% chance that the demand will be high. Draw the decision tree for the problem when the survey is performed before the plant size decision is made.
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\underline{\text { Demand }}$
$\begin{array}{lccc}\text { Factory Size } & \text { High } & \text { Low } & \text { Plant Cost (\$million) } \\\hline \text { Large } & 90 & 40 & 5 \\\text { Small } & 55 & 20 & 1\end{array}$

Identify different types of monetary and non-monetary life cycle costs.

Describe various relationship strategies used by businesses to create social bonds with their clientele.

Recognize the stages of customer relationship development and strategies associated with each stage.

Evaluate the effectiveness of managing customer expectations and strategies for achieving customer delight.

---

Definitions:

Critical

Involving the objective analysis and evaluation of an issue in order to form a judgment.

Greek Word

A term or expression originating from the Greek language, which has contributed significantly to various fields of study and modern vocabulary.

False Dilemma

Responses to complex issues are reduced to an either/or choice.

Fifteenth Amendment

An amendment to the United States Constitution that prohibits the federal and state governments from denying a citizen the right to vote based on that citizen's "race, color, or previous condition of servitude."