Question: Even through indepdent gasoline stations have been having a difficult time, Susan Helms has been thinking about starting her own independent gasoline station. Susan's problem is to decide how large her station should be. The annual returns will depend on both the size of her station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, Susan developed the following table.
| Size of First Station |
Good Market ($) |
Fair Market ($) |
Poor Market ($) |
| Small |
50,000 |
20,000 |
-10,000 |
| Medium |
80,000 |
30,000 |
-20,000 |
| Large |
100,000 |
30,000 |
-40,000 |
| Very large |
300,000 |
25,000 |
-160,000 |
Develop a decision tree. Assume each outcome is equally likely, then find the highest EMV.