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Great Corporations's decision to produce a new line of recreational products resulted in the need to construct either a small plant or large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium and high. Under low long-run demand, small plant size has payoff of P150 and large plant size has P50 payof. Small plant size has payoffs of P200 in medium long-run demand. While large plant size has equal payoff with small size plant in case of medium long-run demand. In case of high long -run demand, large plant size projects a payoff of P500, which is P300 higher than that of the small plant size. 1. Construct the payoff table. 2. What is the decision to be made? 3. What is the chance event for the corporation's problem? 4. Construct a decision tree. 5. Recommend a decision based on the use of the optimistic, conservative and minimax regret approaches.

Great Corporations's decision to produce a new line of recreational products resulted in the need to construct either a small plant or large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium and high. Under low long-run demand, small plant size has payoff of P150 and large plant size has P50 payof. Small plant size has payoffs of P200 in medium long-run demand. While large plant size has equal payoff with small size plant in case of medium long-run demand. In case of high long -run demand, large plant size projects a payoff of P500, which is P300 higher than that of the small plant size. 1. Construct the payoff table. 2. What is the decision to be made? 3. What is the chance event for the corporation's problem? 4. Construct a decision tree. 5. Recommend a decision based on the use of the optimistic, conservative and minimax regret approaches.

Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter15: Decision Analysis
Section: Chapter Questions
Problem 2P: Southland Corporation’s decision to produce a new line of recreational products resulted in the need...
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Great Corporations's decision to produce a new line of recreational products resulted in the need to construct either a small plant or large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium and high. Under low long-run demand, small plant size has payoff of P150 and large plant size has P50 payoff. Small plant size has payoffs of P200 in medium long-run demand. While large plant size has equal payoff with small size plant in case of medium long-run demand. In case of high long -run demand, large plant size projects a payoff of P500, which is P300 higher than that of the small plant size. 1. Construct the payoff table. 2. What is the decision to be made? 3. What is the chance event for the corporation's problem? 4. Construct a decision tree. 5. Recommend a decision based on the use of the optimistic, conservative and minimax regret approaches.
Transcribed Image Text:Great Corporations's decision to produce a new line of recreational products resulted in the need to construct either a small plant or large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium and high. Under low long-run demand, small plant size has payoff of P150 and large plant size has P50 payoff. Small plant size has payoffs of P200 in medium long-run demand. While large plant size has equal payoff with small size plant in case of medium long-run demand. In case of high long -run demand, large plant size projects a payoff of P500, which is P300 higher than that of the small plant size. 1. Construct the payoff table. 2. What is the decision to be made? 3. What is the chance event for the corporation's problem? 4. Construct a decision tree. 5. Recommend a decision based on the use of the optimistic, conservative and minimax regret approaches.
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