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Exercise Following the success of their Scafood fast food restaurant in Miami, the proprietoes, Simon and Jessica, are thinking of expanding the business. They could
Exercise Following the success of their Scafood fast food restaurant in Miami, the proprietoes, Simon and Jessica, are thinking of expanding the business. They could do this by investing in new sites or by franchising the operation to aspiring fast food entrepreneurs who would pay a foc to Simon and Jessica. The estimated profits for each strategy depend on the future demand for healthy fast food, which could increase, remain stable, or decline. Another possibility for Simon and Jessica is to accept the offer of 20m that a major interational fast food company has made for their business. The expected profits are shown in the table below: 1 Strategy Very Cool Cold Cool Hot Very Hot Invest 300+ 2007 40 20 30 Franchise 100+ Nota 50 0 40 Sell 10+ 30+ 10 20+ The proprietors of the business estimate that the probability that demand increases in the future is 0.1, the probability that it remains stable 0.2 and the probability that it deereases is 03. Choose the other probabilities by yourself, but in a meaningful way Using this information construct a decision tree to represent the situation and use it to advise Simon and Jessica. Note: Choose a, b, and in the interval [10; 200) and they whould be three different real numbers. Exercise Following the success of their Scafood fast food restaurant in Miami, the proprietoes, Simon and Jessica, are thinking of expanding the business. They could do this by investing in new sites or by franchising the operation to aspiring fast food entrepreneurs who would pay a foc to Simon and Jessica. The estimated profits for each strategy depend on the future demand for healthy fast food, which could increase, remain stable, or decline. Another possibility for Simon and Jessica is to accept the offer of 20m that a major interational fast food company has made for their business. The expected profits are shown in the table below: 1 Strategy Very Cool Cold Cool Hot Very Hot Invest 300+ 2007 40 20 30 Franchise 100+ Nota 50 0 40 Sell 10+ 30+ 10 20+ The proprietors of the business estimate that the probability that demand increases in the future is 0.1, the probability that it remains stable 0.2 and the probability that it deereases is 03. Choose the other probabilities by yourself, but in a meaningful way Using this information construct a decision tree to represent the situation and use it to advise Simon and Jessica. Note: Choose a, b, and in the interval [10; 200) and they whould be three different real numbers
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