Question: Expected Values and Decision Trees
Consider the two capacity options for Arktec manufacturing from Problem 2 and the three possible demand scenarios from Problem 4, then complete Problem 5.
First, draw the decision tree for Arktec Manufacturing. When drawing your tree, assume that managers must select a capacity option before they know what the demand level will actually be. Then, calculate the expected value for each decision branch. Which option would you prefer and why?
Please use the requested reference below
REFERENCE
Bozarth, C.C. and Handfield, R.B. (2012). Introduction to operations and supply chain management (3rd ed.). Upper Saddle River, New Jersey: Pearson Prentice Hall. CH 3,6, 14 and 15