This decision is represented in the decision tree by

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Unformatted text preview: fixed costs for adding Vector production to the plant in Indiana would total $200 million per year (regardless of sales volume). 1 a. Construct a decision tree to determine which production option maximizes the expected annual profit, considering fixed costs, production costs, and sales revenues. The decision is whether to share the existing plant in Indiana (with a fixed cost of $2 million) or build a new dedicated plant in Georgia (with a fixed cost of $4 million). This decision is represented in the decision tree by a decision node with two branches. For each decision, there are two outcomes: strong sales (60% probability) or moderate sales (40% probability). This is represented in the decision tree by event nodes with two branches. If the Indiana plant is used and sales are strong, the profit wou...
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This document was uploaded on 01/31/2014.

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