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Q1 Costa Coffee operates a chain of coffee shops in Muscat City. Due to immense competition the company is looking at two options to increase
Q1 Costa Coffee operates a chain of coffee shops in Muscat City. Due to immense competition the company is looking at two options to increase revenues across the chain. The estimated impact of the two optic, a on sales and their probabilities are shown in Table Q1 along with the cost of these options. Table Q1 Launch Loyalty Reduce Prices Card Cost of Option 1.200 OMR 1.700 OMR Probability of High Sales 0.9 0.1 Probability of Low Sales 0.1 0.9 Outcome of High Sales 10,000 OMR 7,500 OMR Outcome of Low Sales 7,500 OMR 6.000 OMR Using Decision Tree Analysis technique evaluate the Expected Monetary Value (EMV) of both options and decide which option would be better for the company [25)
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