subject
Mathematics, 25.04.2021 04:30 kenzi352

A supermarket operator must decide whether to build a medium size supermarket or a large supermarket at a new location. Demand at the location can be either average or favourable with estimated probabilities to be 0.35 and 0.65 respectively. If demand is favorable, the store manager may choose to maintain the current size or to expand. The net present value of profits is $623,000 if the firm chooses not to expand. However, if the firm chooses to expand, there is a 75% chance that the net present value of the returns will be 330,000 and 25% chance the estimated net present value of profits will be $610,000. If a medium size supermarket is built and demand is average, there is no reason to expand and the net present value of the profits Is $600,000. However, if a large supermarket is built and the demand turns out to be average, the choice is to do nothing with a net present value of $100,000 or to stimulate demand through local advertising. The response to advertising can be either unfavorable with a probability of 0.2 or faverable with a probability of 0.8. If the response to advertising is unfavorable the net present value of the profit is ($20,000). However, if the response to advertising is favourable, then the net present vale of the profits in $320,000. Finally, if the large plant is built and the demand happens to be high the net present value of the profits is $650.000. Draw a decision tree and determine the most appropriate decision for this company.

ansver
Answers: 1

Another question on Mathematics

question
Mathematics, 21.06.2019 13:30
The soup shack usually makes tomato soup with 99 tomatoes for every 1212 cups of soup. today, they made 88 cups of soup with 66 tomatoes. how does today's soup compare to the usual recipe?
Answers: 2
question
Mathematics, 21.06.2019 16:50
Which undefined geometric term is described as a location on a coordinate plane that is designed by an ordered pair (x,y) ?
Answers: 1
question
Mathematics, 21.06.2019 19:30
Ariel is working at a meat packing plant for 5 nights a week. her regular wage is $11 an hour. she earns tine and a half for any overtime hours. this week she worked 9 hours of over time .how much will ariel earn for overtime this week ?
Answers: 1
question
Mathematics, 21.06.2019 19:50
98 point question what is the record for most points in one
Answers: 2
You know the right answer?
A supermarket operator must decide whether to build a medium size supermarket or a large supermarket...
Questions
question
Spanish, 14.05.2021 22:40
question
Mathematics, 14.05.2021 22:40
question
Mathematics, 14.05.2021 22:40
question
Mathematics, 14.05.2021 22:40
question
Mathematics, 14.05.2021 22:40