Carlisle Tire and Rubber, Inc., is considering expanding production to meet potential increases in the demand for one of its tire products. Carlisle’s alternatives are to construct a new plant, expand...

Carlisle Tire and Rubber, Inc., is considering expanding production to meet potential increases in the demand for one of its tire products. Carlisle’s alternatives are to construct a new plant, expand the existing plant, or do nothing in the short run. The market for this particular tire product may expand, remain stable, or contract. Carlisle’s marketing department estimates the probabilities of these market outcomes as 0.25, 0.35, and 0.40, respectively. The file P10_36.xlsx contains Carlisle’s estimated payoff (in dollars) table.

a. Use PrecisionTree to identify the strategy that maximizes this tire manufacturer’s expected profit.

b. Perform a sensitivity analysis on the optimal decision and summarize your findings. In response to which model inputs is the expected profit value most sensitive?