Andrew Thomas, a sandwich vendor at Hard Rock Cafes annual Rockfest, created a table of conditional values
Question:
The probabilities associated with the states of nature are 0.3 for a big demand, 0.5 for an average demand, and 0.2 for a small demand.
a) Determine the alternative that provides Andrew the greatest expected monetary value (EMV).
b) Compute the expected value of perfect information(EVPI).
Transcribed Image Text:
ALTERNATIVES Large stock Average stock Small stock BIG S22000 14,000 $9,000 STATES OF NATURE (DEMAND) AVERAGE 12,000 $10,000 $ 8,000 SMALL -$2,000 $6,000 $4,000
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a EMV large stock 0322 0512 022 122 EMV av...View the full answer
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