A Manufacturing company is considering expanding its production capacity to meet a growing demand for its product line of air fresheners. The alternatives are to build a new plant, expand the old plant, or do nothing. The marketing department estimates a 35 percent probability of a market upturn, a 40 percent probability of a stable market, and a 25 percent probability of a market downturn. Georgia Swain, the firm's capital appropriations analyst, estimates the following annual returns for these alternatives:

a)	Use a decision tree analysis to analyze these decision alternatives.
b)	What should the company do?
c)	What returns will accrue to the company if your recommendation is followed?

Build new plant Expand old plant Do nothing Market Upturn $690,000 490,000 50,000 Stable Market ($130,000) -45,000 0 Market Downturn ($150,000) -65,000 -20,000