Deborah Hollwager, a concessionaire for the Des Moines ballpark, has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd):

If the probabilities associated with the states of nature are 0.3 for a large crowd, 0.5 for an average crowd, and 0.2 for a small crowd, determine:
(a) The alternative that provides the greatest expected monetary value (EMV).
(b) The expected value of perfect information(EVPI).

Transcribed Image Text:

States of Nature (size of crowd) Average $20,000 $10,000 $2,000 $12,000 $6,000 Large Small Alternatives Large inventory Average inventory Small inventory $15,000 9,000 $6,000 $5,000