Disition making - Statistics Project Example

cted and the demand is low, the option of doing nothing will earn the company a profit of 140,000 or stimulating the demand via the local advertising. The feedback of advertising can either be modest or sizeable with their corresponding probabilities estimated at 0.3 and 0.7. When the advertising is modest the profit will be 70000, and if the advertising id sizable the profit will grow to 770,000. Consequently, assuming the facility to be built is larger, and the demand happens to be high, the recorded profit will be 280,000.

The paper therefore, draws the help for the Director of Research and Development Department at Al Karim to decide on the best decision by embarking on the decision that will maximize the profit of the organization. The paper further draws the decision tree for the current situation of the company. Additionally, the paper calculates the anticipated revenue for the alternative (Fitzgerald, 2002). The sole objective of Al-Karim Inc. in the manufacturing industry is to make and maximize profits. The profits are gained from the operation of the company’s daily activities.

The company operation involves producing Cleaning Vacuums in Qatar. The company through the office of the Research and Development Department will consider building a facility that will have positive revenue returns from its operation. The amount of profit that the company will earn depends on the demand of the product in the anticipated locations of Doha. Assuming the smaller facility brings forth a higher return than the larger facility, then the company will resolve on the same and vice versa.

The choice of facilities depends on various variables like the demand, the probability of certainties, the external factors like advertising response, and the profit that comes along with the variables. The company will use the decision tree find out the best choice out of the alternatives. The choice of the facility will completely depend on the amount of the expected profit from the