Ken Gosling operates a hot dog cart at the local stadium every Saturday. It is currently Thursday, and Ken needs to inform stadium management today whether he will set up his hot dog cart inside or outside on Saturday. Ken has watched the weather channel, and the probability of rain on Saturday is 60%. Each hot dog sells for $2.50, and the total variable cost of each hot dog is $0.80. Ken knows from past experience that he will likely sell the following number of hot dogs:
	Rain	No Rain
Inside	1,500	800
Outside	700	2,200
Required:
a) Set up a pay-off table and determine whether Ken should set up his hot dog cart inside or outside on Saturday. b) Assume that Ken has the opportunity to hire a weather expert who can determine with 100% certainty whether it will rain on Saturday. Calculate the most that Ken should be willing to pay this expert.
Answer:

Answer rating: 100% (QA)

Hot Dog Cart Decision Analysis a Payoff Table and Decision Scenario Inside Outside Rain 60 1500 250 ... View the full answer