Decision Analysis

Problem statement: Company A is contemplating a new product launch. They may launch the new product regionally or simply drop the idea. If they do a regional launch, they may experience high (40% probability) or low response rate at the regional level. If they experience high response rate, they can consider launching the product nationally, keep it regional (profit of $50m), or drop the product altogether (loss of $20m). If they experience low response rate, they can keep the product regional (profit of $10m) or drop it altogether (loss of $20m). If the product is launched nationally, it may experience high (75% probability, profit of $120m) or low response (profit of $40m) at the national level.

Approach: Finding the optimal course of action for Company A using a decision tree and the expected monetary value (EMV).

Programs used: Excel