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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:

Alternatives	Favorable Market	Unfavorable Market
Build large plant	$400,000	-$300,000
Build small plant	$80,000	-$10,000
Don't build	$0	$0
Market probabilities	0.4	0.6

a) Construct a decision tree.

b) Determine the best strategy using expected monetary value (EMV).

c) What is the expected value of perfect information (EVPI)?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92173258

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