A Seattle Entrepreneur Must Decide on the Size of a Latte

question 52

Essay

A Seattle entrepreneur must decide on the size of a latte stand to construct. The manager has narrowed the choice down to large or small. If he builds large and experiences low demand he could grin and bear it for a $200 daily profit, lower prices ($225 daily profit), or hire street performers to attract attention ($175 daily profit). If he builds small and experiences high demand he could do nothing ($175 profit per day), stay open longer hours (profit of $225/day), improve processes ($250/day profit), or raise prices ($200/day profit). Building large for high demand has an expected payoff of $250/day and building small for low demand has an expected payoff of $175/day. There is a 0.7 probability of high demand and 0.3 probability of low demand. Sketch a decision tree for this scenario and determine what size stand should be constructed to slake the unquenchable thirst of caffeine addicts.

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Definitions:

Nature Symbolized

The representation of nature through symbols or motifs in art, literature, and culture to convey deeper meanings or messages.

Photography

The art, practice, or process of creating images by recording light or other electromagnetic radiation, either electronically or chemically.

Edward Weston

An influential American photographer known for his images of natural forms, nudes, and landscapes, pioneering a modern photographic aesthetic in the early to mid-20th century.

Autobiographical

An autobiographical work is one where the author writes about their own life experiences, offering a personal perspective on events and reflections on their actions and choices.