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IT A leading manufacturer of garage doors recently acquired another manufacturer and is considering moving its wood door operations to the acquired plant. Key considerations
IT A leading manufacturer of garage doors recently acquired another manufacturer and is considering moving its wood door operations to the acquired plant. Key considerations in this decision are the transportation, labor, and production costs at the two plants. Complicating matters is the fact that marketing is predicting a decline in the demand for wood doors. The company developed three scenarios and determined the total costs under each decision and scenario, as well as the probability of each scenario occurring, which are given in the accompanying tables. Construct a decision tree and compute the rollback values to find the best expected value decision. Click here to view the scenarios. Click here to view the costs Construct a decision tree of this problem that includes the decision for the manufacturer to keep its wood door operations in its current plant or move them to the acquired plant. Choose the correct answer below. Click view to view decision tree e. O Click view to view decision tree g. Click here to view decision tree h. Click here to view decision tree f Compute the rollback value for the manufacturer staying in its current plant. (Round to the nearest dollar as needed.) Total costs Stay Move Slight Decline $1,180,000 $1,120,000 20% Decline $910,000 $930,000 40% Decline $730,000 $760,000 Probability 0.15 0.39 0.461 Scenarios 1. Demand falls slightly, with no noticeable effect on production. 2. Demand and production decline 20%. 3. Demand and production decline 40%.. Print Done - Clear all Check
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