Vose SoftwareModelChoice decision tree · Retail
Retail Store Rollout
Open 50 stores at once, pilot 10 first, open one flagship, or stay put?
From the model’s decision tree
Best first decision: National Rollout (50 stores)
The expected value of each first option when every later decision is also made well (the tree rolled back).
| First decision | Expected value | |
|---|---|---|
| National Rollout (50 stores) | $83,000,000 | ✔ best |
| Regional Pilot (10 stores) | $62,460,000 | |
| Flagship Store | $1,978,000 | |
| Don't Expand | $0 |
| Measure | Value |
|---|---|
| Expected value of the best strategy | $83,000,000 |
| Chance of a loss on the best strategy | 25.0% |
| Best outcome on the best strategy | $191,000,000 |
| Worst outcome on the best strategy | −$25,000,000 |
S-curve (cumulative probability) of National Rollout (50 stores) from the saved simulation.
The decision
A specialty retail chain is planning its expansion strategy. The company has a proven concept with strong unit economics and must decide between aggressive national expansion, a cautious regional pilot, a high-profile flagship store, or staying put. The options are:
- National Rollout — open 50 stores simultaneously (high risk, high reward)
- Regional Pilot — open 10 stores first, then decide to expand or stay
- Flagship Store — one premium location with brand-building potential
- Don't Expand — preserve capital and current operations
How the inputs are linked
Store Build-Out Cost, Monthly Revenue, Lease Cost, and Staff Cost are defined once and referenced by multiple branches. Changing store economics instantly updates all paths.
The inputs that drive several branches at once:
- Store Build-Out Cost — multiplied by store count in national, regional, and flagship
- Monthly Revenue — drives profit calculations across all store types
- Staff Cost — labor expense applied per store in every path
- Lease Cost — rent expense per store across all scenarios
- Projection Period — time horizon multiplier for all revenue and cost calculations
The decision tree
The tree has 2 decisions, 4 chance events and 12 outcomes. The best path is open: at every decision the best choice is marked, and the expected value beside each branch counts every cash flow from the start. Open any other branch to see what follows it.
DecisionChance event+$ cash flow on the branch
National Rollout (50 stores) −$25,000,000expected $83,000,000 ✔ best
Chance: National Market Reception- 25% Strong Demand +$216,000,000payoff $191,000,000
- 50% Moderate Demand +$108,000,000payoff $83,000,000
- 25% Weak Demandpayoff −$25,000,000
Regional Pilot (10 stores) −$5,000,000expected $62,460,000
Chance: Pilot Results65% Pilot Succeedsexpected $104,600,000
Decision: Post-Pilot DecisionExpand Nationally −$20,000,000expected $104,600,000 ✔ best
Chance: Post-Pilot Expansion Outcome- 35% Strong Demand +$216,000,000payoff $191,000,000
- 50% Moderate Demand +$108,000,000payoff $83,000,000
- 15% Weak Demandpayoff −$25,000,000
- Stay Regional (10 stores) +$21,600,000payoff $16,600,000
- 35% Pilot Fails −$10,800,000payoff −$15,800,000
Flagship Store −$2,000,000expected $1,978,000
Chance: Flagship Performance- 30% Destination Hit +$7,110,000payoff $5,110,000
- 50% Solid Performer +$3,870,000payoff $1,870,000
- 20% Underperforms −$450,000payoff −$2,450,000
- Don't Expandpayoff $0
Change the numbers. Open the workbook with ModelChoice, change a probability or a cost in the tree, and the best decision updates at once.
Key assumptions
| Assumption | Value | Notes |
|---|---|---|
| Store Build-Out Cost | $500,000 | Cost to build and fit out one store |
| Average Monthly Revenue per Store | $120,000 | Expected monthly revenue per location |
| Lease Cost per Month | $25,000 | Monthly lease per store location |
| Staff Cost per Store (Monthly) | $35,000 | Payroll and benefits per store/month |
| Break-Even Months | 18 | Months to reach profitability |
| National Rollout Stores | 50 | Number of stores in national rollout |
| Regional Pilot Stores | 10 | Number of stores in regional pilot |
| Projection Period | 36 | Financial projection horizon |
| Flagship Premium Multiplier | 2.5 | Revenue multiplier for flagship location |
| Flagship Build Premium | $1,500,000 | Extra cost for flagship build-out |
| Pilot Success Probability | 65.0% | Likelihood pilot leads to expansion |
| Market Growth Rate (Monthly) | 2.0% | Expected monthly revenue growth rate |
The figures are illustrative: the companies and numbers are invented for teaching.
Try it in ModelChoice
- Increase Monthly Revenue. Watch all profit terminals rise together
- Raise Store Build-Out Cost. See how it hits national rollout hardest
- Lower Pilot Success Probability. See the pilot strategy become less attractive
- Run Sensitivity Analysis. Find which cost driver matters most
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Further reading
Download the workbook and open it with ModelChoice. The free trial opens every example.
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An illustrative example: the figures are invented for teaching. Last updated 9 October 2026.