17. [M042] Jerry Hill is president and CEO of a U.S.-based food processing company, Hill Products and Services. He was recently approached by an international supermarket chain that wants to market in-country its own brand of frozen microwaveable dinners. The offer made to lerry by the supermarket corporation requires that a series of two decisions be made, now and 2 years hence. The current decision involves two alternatives: (1) Lease a facility in Germany from the supermarket chain, which has agreed to convert a current processing facility for immediate use by Jerry's company, or (2) build and own a processing and packaging facility in Germany. Possible outcomes of this first decision stage are good market or poor market depending upon the public's response. The decision choices 2 years hence are dependent upon the lease or own decision made now. If Hill decides to lease. good market response means that the future decision alternatives are to produce at twice equal to, or one-half of the original volume. This will be a mutual decision between the supermarket chain and Jerry's company. A poor market response will indicate a one-half level of production, or complete removal from the German market. Outcomes for the future decisions are again, good and poor market responses. As agreed by the supermarket company, the current decision for Jerry to own the facility will allow him to set the production level 2 years hence of market response is good, the decision alternatives are four of two times original levels. The reaction to poor market response will be production at the same level or no production Construct the tree of decisions and outcomes for a Products and Services (15 points) 17. [M042] Jerry Hill is president and CEO of a U.S.-based food processing company, Hill Products and Services. He was recently approached by an international supermarket chain that wants to market in-country its own brand of frozen microwaveable dinners. The offer made to lerry by the supermarket corporation requires that a series of two decisions be made, now and 2 years hence. The current decision involves two alternatives: (1) Lease a facility in Germany from the supermarket chain, which has agreed to convert a current processing facility for immediate use by Jerry's company, or (2) build and own a processing and packaging facility in Germany. Possible outcomes of this first decision stage are good market or poor market depending upon the public's response. The decision choices 2 years hence are dependent upon the lease or own decision made now. If Hill decides to lease. good market response means that the future decision alternatives are to produce at twice equal to, or one-half of the original volume. This will be a mutual decision between the supermarket chain and Jerry's company. A poor market response will indicate a one-half level of production, or complete removal from the German market. Outcomes for the future decisions are again, good and poor market responses. As agreed by the supermarket company, the current decision for Jerry to own the facility will allow him to set the production level 2 years hence of market response is good, the decision alternatives are four of two times original levels. The reaction to poor market response will be production at the same level or no production Construct the tree of decisions and outcomes for a Products and Services (15 points)
