Question: 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 best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium, or high. The following payoff table shows the projected profit in millions of dollars:

                                          Long-Run Demand

Plant Size                Low                Medium               High

Small                       150                   200                 200

Large                        50                   200                 500

a. What is the decision to be made, and what is the chance event for Southland's problem?

b. Construct a decision tree.

c. Recommend a decision based on the use of the optimistic, conservative, and minimax regret approaches.