Question: 1 Given the following conditional value table, deter- mine the appropriate decision under uncertainty using: a) Maximax b) Maximin c) Equally likely PX STATES OF

1 Given the following conditional value table,

1 Given the following conditional value table, deter- mine the appropriate decision under uncertainty using: a) Maximax b) Maximin c) Equally likely PX STATES OF NATURE VERY FAVORABLE AVERAGE UNFAVORABLE ALTERNATIVES MARKET MARKET MARKET Build new plant $350,000 $240,000 -$300,000 Subcontract $180,000 $ 90,000 $ 20,000 Overtime $110,000 $ 60,000 $ 10,000 Do nothing $ 0 $ 0 $ 0 7 7 The following payoff table provides profits based on various possible decision alternatives and various levels of demand at Robert Klassan's print shop: DEMAND LOW HIGH Alternative 1 $10,000 $ $30,000 Alternative 2 $5,000 $40,000 $ Alternative 3 $ 2,000 $50,000 The probability of low demand is 0.4, whereas the probability of high demand is 0.6. a) What is the highest possible expected monetary value? b) What is the expected value with perfect information (EVwPI)? c) Calculate the expected value of perfect information for this situation. PX

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