Diet Coke is contemplating introduction of a new energy drink and a new brand of root beer. We will analysis each decision separately. First we consider analysis of their decision regarding the new energy drink. The company estimates that in case they produce the new energy drink it will yield a profit of $1,000,000 if sales turn out to be around 100,000,000 bottles, a profit of $200,000 if sales turn out to be 50,000,000 bottles, or they will lose $2,000,000 if sales turn out to be around 1,000,000 bottles. If Diet Coke doesnt produce the new energy drinks, they will suffer a loss of $400,000.

1. Draw a decision tree for this problem
2. Set up a payoff table and explain
3. Set up a regret table and explain
4. Explain in details and provide the appropriate arguments if Diet Coke introduce the new energy drink by using
   1. a conservative approach
   2. an optimistic approach
   3. the middle of the road (MaxiMin Regret) approach
5. An internal study by the management estimates that the probability of selling 100,000,000 bottles is 0.3333, the probability of selling 50,000,000 bottles is 0.50, the probability of selling 1,000,000 bottles is 0.1667. Should they introduce the new diet drink? Why? Explain in details.
6. Soft Drink Consultants is a company that provides a tailor-made feasibility study for a consulting fee of $275,000. Should Diet Coke hire them to conduct such study? Why? Explain