Assignment:
Southland Corporation's decision to produce a new line of recreational products resulted in the need to construct either a small plant or a large plant. The selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing has decided to view the possible long-run demand as either low, medium, or high. The following payoff table shows the projected profit in millions of dollars:
Long-Range Demand
|
Plant Size
|
Low
|
Medium
|
High
|
|
Small
|
150
|
200
|
200
|
|
Large
|
50
|
200
|
500
|
Q1. What is the decision to be made, and what is the chance event for Southland's problem?
Q2. Construct an influence diagram.
Q3. Construct a decision tree.
Q4. Recommend a decision based on the use of the optimistic, conservative, and minimax regret approaches.
Provide complete and step by step solution for the question and show calculations and use formulas.