After a recent news report linking Gummy Bear consumption to increased IQ, sales have gone through the roof. As a result, a new Gummy Bear manufacturing facility is being planned. You must decide whether to build a large, average, or small factory. Because Gummy Bears are luxury goods, profitability of the new factory depends on the strength of the economy. Profitability values under each economic scenario are shown in the following payoff table: Economy Factory Size Weak Stable Strong Large -$120,000 $50,000 $200,000 Average -$30,000 $120,000 $90,000 Small $20,000 $30,000 $40,000 Probability 0.2 0.5 0.3

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Draw a decision tree and solve it

After a recent news report linking Gummy Bear consumption to
increased IQ, sales have gone through the roof. As a result, a
new Gummy Bear manufacturing facility is being planned. You
must decide whether to build a large, average, or small factory.
Because Gummy Bears are luxury goods, profitability of the new
factory depends on the strength of the economy. Profitability
values under each economic scenario are shown in the following
payoff table:
Economy
Factory Size
Weak
Stable
Strong
Large
-$120,000
$50,000
$200,000
Average
-$30,000
$120,000
$90,000
Small
$20,000
$30,000
$40,000
Probability
0.2
0.5
0.3
Transcribed Image Text:After a recent news report linking Gummy Bear consumption to increased IQ, sales have gone through the roof. As a result, a new Gummy Bear manufacturing facility is being planned. You must decide whether to build a large, average, or small factory. Because Gummy Bears are luxury goods, profitability of the new factory depends on the strength of the economy. Profitability values under each economic scenario are shown in the following payoff table: Economy Factory Size Weak Stable Strong Large -$120,000 $50,000 $200,000 Average -$30,000 $120,000 $90,000 Small $20,000 $30,000 $40,000 Probability 0.2 0.5 0.3
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