Rosenblatt Enterprises used decision tree analysis and cost-benefit analysis in their decision to keep open their current plant. The quantitative costs of keeping the plant open were $5,000,000, while the quantitative benefits of keeping the plant open were only $3,000,000. Rosenblatt decides to keep the plant open. The decision to keep the plant open is appropriate if:
A) Additional qualitative benefits exceed $2,000,000
B) The relevant costs less the benefits of closing the plant were greater than $2,000,000
C) It would never be appropriate
D) Both A & B

Question

Quizplus · Accepted Answer

The decision to keep the plant open can be justified if there are additional qualitative benefits that exceed the $2,000,000 shortfall in the quantitative analysis, or if the costs of closing the plant (when considering relevant costs minus benefits of closing) are greater than $2,000,000. Both scenarios provide a rationale for keeping the plant open despite the initial quantitative analysis.

Rosenblatt Enterprises Used Decision Tree Analysis and Cost-Benefit Analysis in Their