Construct a spreadsheet that makes the calculations required to analyze the decision in the WGT example. Include
Question:
Construct a spreadsheet that makes the calculations required to analyze the decision in the WGT example. Include in the spreadsheet the calculation of the expected profit for each action and the calculation of the expected regret for each action. As a check, confirm that these two expected values match the values mentioned in the chapter.
a. Does the expected regret equal the EVPI for this example? Why is this true in general?
b. The probability of a Fair market response is 0.5 under the initial set of assumptions. Suppose this value were to change by an amount p (where 0 5 p 0 5). For what values of p does the Two Versions choice represent the optimal decision?
Step by Step Answer:
Business Analytics The Art Of Modeling With Spreadsheets
ISBN: 9781119386490
5th Edition
Authors: Stephen G. Powell, Kenneth R. Baker.