A firm producing stereo amplifiers can manufacture a subassembly or purchase it from another company. Anticipated profits for each alternative, make or buy, and for three different levels of demand for the stereo amplifier are as follows:

Required:
Construct a decision tree for the make-or-buy decision, and calculate the expected value for each alternative. Indicate whether the firm should make or buy.

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Expected Net Profits Probability Make $50,000 State of Market High Medium... Low Bu $35,000 30,000 5,000 30,000 (10,000)