I have to figure out the following problemand do not have a clue where to begin. I have searched the web and find nothing I understand. I do not even know where to begin. Any help out there?
A new small manufacturing company, which produces toys, has to decide whether they want to distribute their product through a wholesale distributor, go directly to department store, or reopen their own store. The table below shows the revenue results for each decision.
Distribution Network Good Economic Conditions Not-So-Good Economic Conditions
Wholesaler $75.0 Million $60 Million
Direct $82.5 Million $12.5 Million
Own Store $177.5 Million $-112.5 Million
a. What is the probability value of Good Economic Conditions that will make distributing through a Wholesaler or Direct equal? What is the probability value to equate Wholesaler and Own Store?
b. Create a sensitivity graph comparing the different alternatives as the probability of Good Economic Conditions changes.
I would apprciate any help!!!
Sunshine
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