ou have an option to build a new mall or remove it. A new mall will cost P500M as investment to build it or demolish/remove an old one which cost P150M. To build – 75% chance of high demand – profit is P75M and a 25% weak demand w/ a profit of P25M. To remove – 60% chance of high demand – profit of P50M and a 40& weak demand w/ a profit of P10M. If you are the CEO, should you build or remove it. What is the EVM of either option? Draw the design tree

ou have an option to build a new mall or remove it. A new mall will cost P500M as investment to build it or demolish/remove an old one which cost P150M. To build – 75% chance of high demand – profit is P75M and a 25% weak demand w/ a profit of P25M. To remove – 60% chance of high demand – profit of P50M and a 40& weak demand w/ a profit of P10M. If you are the CEO, should you build or remove it. What is the EVM of either option? Draw the design tree

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 46P

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