A manufacturing company is considering expanding its production capacity to meet a growing demand for its product line of air fresheners. The alternatives are to build a new plant, expand the old plant, or do nothing. The marketing department estimates a 35% probability of a market upturn, a 40% probability of a stable market, and a 25% probability of a market downturn. Georgia Swain, the firm's capital appropriations analyst, estimates the following annual returns for these alternatives:
a. Use a decision tree to analyze these decision alternatives.
b. What should the company do?
c. What returns will accrue to the company if your recommendation is followed?
a. 
b. Decision: Build the new plant.
c. Returns to accrue: $690,000; ($130,000); or ($150,000)
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