Question: 3. Alejandro is off school for the summer, and has an opportunity to work for an uncle who has a franchise on food trucks. The

3. Alejandro is off school for the summer, and has an opportunity to work for an uncle who has a franchise on food trucks. The uncle sells two types of food from his trucks, and the driver gets a share of the profits. Alejandro ran the profits from both types of trucks and the weather than summer through an analysis, and came up with the following profit tables (in $1000s) for the summer

	Summer hot	summer moderate / cool
small ice ream	35	10
sell tacos	15	25

a. What are the decision alternatives? How can you tell? b. What are the states of nature? How can you tell? c. What decision would a conservative decision-maker choose? State the criterion used and show your work for the answer. d. What decision would an optimistic decision-maker choose? State the criterion used and show your work for the answer.

4. For the problem above, suppose Alejandro believes that the probability of a hot summer will be 0.4. a. Draw the decision tree. b. Calculate the expected values for each of the decisions. c. Which decision should be made when using the probability/decision tree method of making decisions? Why?

5. Using the table in problem 3 a. Calculate the EV with PI (expected value WITH perfect information). Show your work below.

b. What is the EV WITHOUT PI (expected value WITHOUT perfect information)? Where did you get that from? c. Calculate the EVPI (or EV OF PI: the expected value OF perfect information)

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