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A factory manager has to decide to invest in product A or product B (she cannot do both due to budget constraints). Product A
A factory manager has to decide to invest in product A or product B (she cannot do both due to budget constraints). Product A is estimated to require two million dollars of R&D investment, but only has a 50% chance of the research being successful and a product being obtained. It will then have a 30% chance of selling $5M profit, a 40% chance of selling $10M profit, and a 30% chance of no sales. Product B, on the other hand, will also cost $2M in R&D but has an 80% chance of selling $5M profit and a 20% chance of no sales. $1M is the manufacturing cost for either product. Advise the manager based on the decision tree analysis.
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Heres an analysis using a decision tree to advise the factory manager Product A RD Success 50 Failur...Get Instant Access to Expert-Tailored Solutions
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