Chris and Aziz are two budding entrepreneurs operating a small grocery chain in Singapore. Their company, Aztec Prima recently secured a distributorship for a unique yoghurt drink from Taiwan manufacturer. The myriad flavours and pleasant taste of the drink quickly won over the taste buds among the old and young. Following the reasonable success of the yoghurt drink in Singapore, both business partners are eyeing the larger market in Malaysia. They have the following alternatives to consider, viz: Option 1 - test in Johor Bahru (JB) Option 2 - do not test in Johor Bahru (JB) For Option 1, there is 80% chance of success and 20% chance of failure. If Option 1 (test in JB) is successful, there are 2 choices: Choice A - launch in Malaysia with the success and failure and expected net revenue as shown in Table 2.1: Outcome Success Failure Launch in Other Malaysian cities Probability Net Revenue per Month 0.85 $420,000 0.15 $20,000 Table 2.1 - Launch in other Malaysian cities Choice B do not launch in Malaysia (i.e. focus in JB) with an expected net revenue of $120,000 per month. If Option 1 (test in JB) is a failure (i.e. 20%), there are 2 choices: Choice C-launch in Malaysia with the success and failure and expected net revenue as shown in Table 2.2: Outcome Success Failure Launch in Other Malaysian cities Probability Net Revenue per Month 0.10 $400,000 0.90 $22,000 Table 2.2 - Launch in other Malaysian cities Choice D- do not launch in Malaysia (i.e. focus in JB) with an expected net revenue of $20,000 per month. For Option 2 (do not test in JB), they have two choices: Choice E - launch in Malaysia with the success and failure and expected net revenue as shown in Table 2.3: Outcome Success Failure Launch in Other Malaysian cities Probability Net Revenue per Month 0.55 $420,000 0.45 $50,000 Table 2.3 Launch in other Malaysian cities Choice F do not launch in Malaysia (i.e. focus in JB) with an expected net revenue of $170,000 per month. (i) Based on the above information, define a Decision Tree, showing clearly the Decision nodes, Event Nodes and Terminal Nodes and related net revenues. Label clearly all branches, Decision nodes and Event nodes in your Decision Tree diagram. Chris and Aziz are two budding entrepreneurs operating a small grocery chain in Singapore. Their company, Aztec Prima recently secured a distributorship for a unique yoghurt drink from Taiwan manufacturer. The myriad flavours and pleasant taste of the drink quickly won over the taste buds among the old and young. Following the reasonable success of the yoghurt drink in Singapore, both business partners are eyeing the larger market in Malaysia. They have the following alternatives to consider, viz: Option 1 - test in Johor Bahru (JB) Option 2 - do not test in Johor Bahru (JB) For Option 1, there is 80% chance of success and 20% chance of failure. If Option 1 (test in JB) is successful, there are 2 choices: Choice A - launch in Malaysia with the success and failure and expected net revenue as shown in Table 2.1: Outcome Success Failure Launch in Other Malaysian cities Probability Net Revenue per Month 0.85 $420,000 0.15 $20,000 Table 2.1 - Launch in other Malaysian cities Choice B do not launch in Malaysia (i.e. focus in JB) with an expected net revenue of $120,000 per month. If Option 1 (test in JB) is a failure (i.e. 20%), there are 2 choices: Choice C-launch in Malaysia with the success and failure and expected net revenue as shown in Table 2.2: Outcome Success Failure Launch in Other Malaysian cities Probability Net Revenue per Month 0.10 $400,000 0.90 $22,000 Table 2.2 - Launch in other Malaysian cities Choice D- do not launch in Malaysia (i.e. focus in JB) with an expected net revenue of $20,000 per month. For Option 2 (do not test in JB), they have two choices: Choice E - launch in Malaysia with the success and failure and expected net revenue as shown in Table 2.3: Outcome Success Failure Launch in Other Malaysian cities Probability Net Revenue per Month 0.55 $420,000 0.45 $50,000 Table 2.3 Launch in other Malaysian cities Choice F do not launch in Malaysia (i.e. focus in JB) with an expected net revenue of $170,000 per month. (i) Based on the above information, define a Decision Tree, showing clearly the Decision nodes, Event Nodes and Terminal Nodes and related net revenues. Label clearly all branches, Decision nodes and Event nodes in your Decision Tree diagram
