Question
A designer is choosing between three manufacturers that want to produce her designs. The first company offers $20,000 plus $3 per book sold. The second
A designer is choosing between three manufacturers that want to produce her designs. The first company offers $20,000 plus $3 per book sold. The second company offers $5,000 plus $5 per book sold. The third company offers 12,500 plus $4 per book sold. The possible demand scenarios are: 750, 1500, 4500, 10,000, and 25,000 itms sold.
B) Imagine the designer considers that the probability of selling 750 books is 0.9; of selling 1500 is 0.7; of selling 4500 is 0.4; of selling 10,000 is 0.2 and of selling 25.000 is 0.1. Set out a decision tree for the three offers and decide which company the designer should work with. Below the tree comment on the best decision.
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