A plant manager considers the operational cost per hour of five machine alternatives. The cost per hour
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Question:
A plant manager considers the operational cost per hour of five machine alternatives. The cost per hour is sensitive to three potential weather conditions: cold, mild, and warm. The following table represents the operations cost per hour for each alternative-state of nature combination:
| States of Nature | ||
| Weather related cost per hour | ||
| Cold cost / day | Mild cost / day | Warm cost / day |
Machine 1 | $45 | $35 | $40 |
Machine 2 | $40 | $38 | $45 |
Machine 3 | $35 | $30 | $50 |
Machine 4 | $60 | $25 | $45 |
Machine 5 | $45 | $40 | $40 |
Assume that for a randomly selected day, there is a 30% probability of cold weather, 50% probability of mild weather, and 20% probability of warm weather. What is the EVPI?
Related Book For
Elementary Statistics A step by step approach
ISBN: 978-0073386102
8th edition
Authors: Allan Bluman
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