Question: Show your complete solutions. Problem 1. The following payoff table provides profits based on various possible decision alternatives and various levels of demand. States of

Show your complete solutions.

Problem 1.

The following payoff table provides profits based on various possible decision alternatives and various levels of demand.

States of Nature

Demand

AlternativeLowMediumHigh

Alternative 180120140

Alternative 2909090

Alternative 35070150

The probability of a low demand is 0.4, while theprobability of a medium and high demand is each 0.3.

A. What is the highest possible expected monetary value?

B.. Calculate the expected value of perfect information for this situation

Problem 2.

Consider the following time series data:

YearValue

1234

2287

3255

4310

5298

6250

7456

8412

9525

10436

Using the trend projection as a forecast for the next year, compute the following measures of forecast accuracy:

A. Mean absolute deviation.

B. What is the forecast for year 11?

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