50 0.2
100 0.35
150 0.25
200 0.2
cost 8.5
price 15
refund 3.5
Ordered 200
Sold 150
Refunded 50
Priofit 725
a
Demand supply
725 50 100 150 200
50
100
150
200
b
Probabilty Alternatives
50 100 150 200
0.2 65 15 -35 -85
0.35 227.5 140 52.5
0.25 244 181
0.2 260
c
Based on EV and its probability it can be safely assumed that 200 units should be ordered.
d
Probability PI Weighted
0.2 325 65
0.35 0 0
0.25 0 0
0.2 0 0
EV with PI 1159
EV of PI 750
The difference bt the Evs is of 750 it can be seen that this is the differnce between the overall EV and
the maximized EV in each situation.
n the overall EV and
For Evaluation Only
0.25
Slow Growth
0 44500000 0.75
Outcome 14
56000000 56000000
0.25
Slow Growth
28000000 28000000
0 45250000 Expand
0
0.75
High Growth
1
0 51000000
Do Nothing
2 48000000
45250000
0.25
Slow Growth
40000000 40000000
Expansion
Do Nothing
0 0
b
Recommendation
It can be observed that the best alternative is to construct a medium facility and if the market
experiences high growth than the wise choice recommended is to expand.
10000000
56000000
28000000
0.3
High Profit
44000000
44000000 44000000
51000000 0.7
Low Profit
54000000
54000000 54000000
o Nothing
48000000
48000000
40000000
44000000
44000000
0.65
High Profit
48000000
48000000 48000000
45900000 0.35
Low Profit
42000000
42000000 42000000
nd if the market
ID
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Expand
0.57
Positive Results
2
0 17600
Build
Perform Survey
-1000 10075
Expand
0.43
Negative Results
2
0 100
1 Build
10075
0
0.2
High Demand
20000
0.5
Expand Medium Demand
0 -27000 10000
0.3
Low Demand
30000
0.5
Build Medium Demand
0 7000 14000
0.3
Low Demand
-20000
b
recommendation
It is hereby recommended that the survey should be performed and in terms of both positive and neg
0.5
High Demand
19000
20000 19000
0.4
Medium Demand
9000
1000 10000 9000
0.1
Low Demand
-121000
-120000 -121000
0.5
High Demand
29000
30000 29000
0.4
Medium Demand
13000
17600 14000 13000
0.1
Low Demand
-21000
-20000 -21000
0.15
High Demand
19000
20000 19000
0.4
Medium Demand
9000
-48000 10000 9000
0.45
Low Demand
-121000
-120000 -121000
0.15
High Demand
29000
30000 29000
0.4
Medium Demand
13000
100 14000 13000
0.45
Low Demand
-21000
-20000 -21000
igh Demand
20000
20000
Medium Demand
10000
10000
ow Demand
-120000
-120000
igh Demand
30000
30000
Medium Demand
14000
14000
ow Demand
-20000
-20000
f both positive and negative results build option should be utilized as it pays out most.
ID
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28