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Dwayne Whitten, president of Whitten Industries, is considering whether to build a manufacturing plant in north Texas. His decision is summarized in the following table:

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Dwayne Whitten, president of Whitten Industries, is considering whether to build a manufacturing plant in north Texas. His decision is summarized in the following table: Alternatives Build large plant Build small plant Don't Build Market Probability Favorable Unfavorable Market Market $400,000 - $300,000 $100,000 -$15,000 $0 $0 0.25 0.75 a) The correct decision tree for Dwayne is shown in Figure 3 (all payoffs are in thousands). b) To maximize the return, Dwayne's decision should be to Don't Build Build large plant Build small plant a Q FIGURE 3 Build Large -125 F(0.25 400 -300 U(0.75) F(0.25 100 Build Small 13.76 13.75 -15 U(0.75) F(0.25 0 0 Don't Build U(0.75) F Favorable, U = Unfavorable

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