2. Determine the course of action that has the highest expected payoff for the decision tree below!$1.0*$1.3Do nothingMedium demand (.5)Large demand (.1)Small demand (.4)Expand$1.3Do nothingExpand$1.5$1.6Build$1.8Do nothingOther use #1$0.7$1.5Small demand (.4)Medium demand (.5)Other use #2$1.0Expand$1.6Large demand (. 1)Do nothingSubcontract$1.6$1.5Build$1.7Do nothingOther use #1($0.9)$1.4Small demand (.4)Medium demand (.5)Other use #2$1.0Do nothingOther use #1$1.0Large demand (.1)$1.1Other use #2$0.9* Net present value in millions$2.4SubcontractBuild

The calculation of the highest expected payoff requires multiplying each outcome by the estimate of…

Answered: 2. Determine the course of action that…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 21P

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