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Please draw the decision tree and explain. company is considering three different candy flavors to introduce nationally. Flavors are A, B, and C. They also
Please draw the decision tree and explain.
company is considering three different candy flavors to introduce nationally. Flavors are A, B, and C. They also have the option to not introduce any flavors this year. The profits from flavors A, B, and C are $2,416,363, $1,829,843, and $1,464,600 respectively if the national market is favorable. However, if the national market is unfavorable, the losses are $483,650, $847,675, and $828,695 respectively. Historical data shows a probability of 0.523 for a favorable national market. The company can test the market for candy flavors in selected geographic areas before introducing them nationally. The cost of the test market is $47,439. In the past, the probability of a negative test market was 0.418. Given a positive test market, a favorable national market was actually observed with a probability of 0.758. Given a negative test market, a favorable national market was actually observed with a probability of 0.215. Determine if the company should test the market before introducing their products nationally, using a decision tree. What is the EMV of the best decisionStep by Step Solution
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