PAYOFF TABLE

Possible Future Conditions

Alternatives Demand for Furniture Up (.60) Construct P 600, 000 New Warehouse Expand Old P 500, 000 Warehouse Demand for Furniture Down (.20) P (300, 000) Demand for Furniture Unchanged (.20) P (300, 000) Expected Value P 240, 000

P 200, 000

P 200,000 P 300, 000

P 380, 000 P 320, 000

P 500, 000 P (200, 000) Rent or Lease Warehouse

BREAK EVEN ANALYSIS

Total Revenues

Pesos

Total Costs

Break-Even Point

Output

DECISION TREE
First Decision

Second Decision

High (.60) P300, 000

Denotes choice point or node

Denotes outcome point or node

P30, 000 Low (.40)

Large Expansion
P160, 000
High (.60)

Medium Expansion

Low (.40)

No Expansion

P20, 000