Question: Problem #18, Page 587 Expected Values (a) Payoff table and Maximum expected payoff Market Conditions Investment Favorable Stable Unfavorable Alternatives 0.2 0.7 0.1 Widget 120,000

Problem #18, Page 587 Expected Values (a) Payoff

Problem #18, Page 587 Expected Values (a) Payoff table and Maximum expected payoff Market Conditions Investment Favorable Stable Unfavorable Alternatives 0.2 0.7 0.1 Widget 120,000 70,000 -30,000 Hummer 60,000 40,000 20,000 Nimnot 35,000 30,000 30,000 Column Max (for EVPI and opportunity loss calculations) The maximum expected payoff= The best alternative as the decision is 6 (b) Minimum EOL Method. Show your Opportunity loss table (regret table) and EOLs down here: Market Conditions Favorable Stable Unfavorable 0.2 0.7 0.1 Expected Values (EOL'S) Product alternatives Widget Hummer Nimnot The value of minimum EOL= The best alternative as the decision is (c) Expected payoff without perfect information (EPWORA) = Expected payoff with perfect information (EPxPD) = Expected value of perfect information (EVPI) =EPWPI-EPLORA=

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