A Company Must Decide Whether to Build a Small,medium,or Large

question 13

Essay

A company must decide whether to build a small,medium,or large grocery store.Marketing research findings indicate a 0.35 probability that demand will be low and a 0.65 probability that demand will be high.If the company builds a small grocery store and demand is low,the net present value will be $150,000.If demand is high the company can buy its additional grocery needs from a wholesaler and realize a net present value of $100,000 or expand and realize a net present value of $120,000.If the company builds a medium grocery store and demand is low,the net present value will be $175,000;if demand turns to be high the company could do nothing and realize a net present value of $100,000,or expand and realize a net present value of $135,000.If the firm builds a large grocery store and demand is low,the net present value will be $50,000;if demand turns out to be high the net present value will be $250,000.
a.Develop a decision tree for this problem.
b.Analyze the decision tree and determine which alternative should be chosen.

---

Definitions:

Attractive Speaker

An individual perceived as appealing or pleasing in their manner of speaking, often influencing audience engagement and reception.

Influenced

Being affected or changed in behavior, attitude, or other aspects due to the impact of external factors.

Situational Attribution

The process of inferring that a person's behavior is due to situational factors.

Dispositional Attribution

The tendency to attribute someone's behavior to their personality or character rather than to external factors.