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MODULE
Tools
1
t ruct t Unfavorable market
o ns plan
C ge
lar Favorable market
Construct
small plant
2
Do Unfavorable market
no
thi
ng
Figure A.1
TABLE A.1 Decision Table with Conditional Values for Getz Products
STATES OF NATURE
ALTERNATIVES FAVORABLE MARKET UNFAVORABLE MARKET
Construct large plant $200,000 –$180,000
Construct small plant $100,000 –$ 20,000
Do nothing $ 0 $ 0
Payoffs
Favorable market (.6)
$200,000
nt 1
e pla Unfavorable market (.4)
l arg
t
–$180,000
s t ruc Favorable market (.6)
n
Co $100,000
Construct
small plant 2
Unfavorable market (.4)
Do –$20,000
no
th
in EMV for node 2
g = (.6)($100,000) + (.4)(–$20,000)
= $52,000
$0
Figure A.3