Dwayne Whitten, president of Whitten Industries, is considering whether to build

Question

Dwayne Whitten, president of Whitten Industries, is considering whether to build a manufacturing plant in north Texas. His decision is summarized in the following table:

Homework: HW# 10-Module A-Decision Making Tools-Part#02 5 of 5 (4 complete)> Score: 1.33 of 2 pts %) Problem A.22 Dwayne Whitten, president of Whitten Industries, is Don't Build U(0.60) considering whether to build a manufacturing plant in north Texas. His decision is summarized in the folowing table F-Favorable, UUnfavorable Favorable Unfavorable Alternatives Market Market 360,000 250,000 $120,000S Build large plant Build small plant Don't Build Market Probability FIGURE 3 S0 0.40 -$20,000 S0 0.60 Build Large F(0.40) 360 -6 250 a) The correct decision tree for Dwayne is shown in Figure 3 (all payoffs are in thousands). b) To maximize the return, Dwayne's decision should be to Build small plant c) For Dwayne, the expected value of perfect information (EVPI) (enter your answer as a whole number) U(0.60) Build Smal F(0.40) 120 36 36 20 U(0.60) F(0.40 Don't Build U(0.60) F-Favorable, U Unfavorable

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Answer:

c)

Explanation:

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