Pupkewitz has developed two new products, Product X and Product Y, but has insufficient resources to launch both products. The success of the products will depend on the extent of competitor reaction. There is a twenty percent chance that competitors will take no action, a fifty percent chance that they will launch a similar product and a thirty percent chance that they will launch a better product. The profit/loss that will be earned by each of the products depending on the extent of competitor reaction is as follows

Another option for Pupkewitz would be to launch neither product. If it chooses this course of action there is a sixty percent chance that competitors will take no action and there will be no effect on the company’s profit. There is a forty percent chance that competitors will launch a new product and company profits will reduce by N$100,000.

Required:

Demonstrate, using a decision tree and based on expected value, the best course of action for the company.