A construction company must decide on the size of the shopping null, i e Large.

Question

A construction company must decide on the size of the shopping null, i e Large. Medium or Small, that has to he constructed in their acquired plot in the sub urban area of Seattle Due to the market conditions the number of visitors to the mall will be High. Moderate, or Low The level of response and the sue of the mall will decide the return of investment from the mall The profit payoff table for management (in millions of dollars) after S years is provided below Use a decision tree to recommend a decision Use EVPI to determine whether the construction company should attempt to obtain a better estimate of the response

Explanation / Answer

Large

25 * 0.35 + 15 * 0.40 + -20*0.25

9.75

Medium

20*0.35 + 12*0.40 - 10*0.25

9.3

Small

15*0.35 + 13*0.40 + 5*0.25

11.7

decision : Small because it has more probabily

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