Steve Mountain Bicycle Shop is considering three options for its facility next year. Steve can expand his current shop, move to a larger facility, or make no change. With a good market, the annual payoff would be $76,000 if he expands, $90,000 if he moves, and $40,000 if he does nothing. With an average market, his payoffs will be $30,000, $41,000, and $15,000, respectively. With a poor market, his payoff will be -$17,000, -$28,000, and -$4,000.

Question 1 (2 pts for manual calculation): Fill in the following table with the payoff numbers provided by the question.

Question 2 (2 pts for manual calculation; 2 pts for using Excel): Which option should Steve choose if he uses the Optimistic (Maximax) criterion? Show your work by filling numbers in the table below. (Note that you can copy/paste the payoff numbers from your answer to Question 1.)

Question 3 (2 pts for manual calculation; 2 pts for using Excel): Which option should Steve choose if he uses the Pessimistic (Maximin) criterion? Show your work by filling numbers in the table below.

Question 4 (2 pts for manual calculation; 2 pts for using Excel): Which option should Steve choose if he uses the criterion of realism with = 0.4 ?

Question 5 (2 pts for manual calculation; 2 pts for using Excel): Which option should Steve choose if he uses the equally likely criterion?

Question 6 (2 pts for manual calculation; 2 pts for using Excel): Which option should Steve choose if he uses the minimax regret criterion? Show your work by filling numbers in the opportunity loss/regret table below.

Opportunity Loss/Regret Table:

Alternative	Good Market	Average Market	Poor Market
Expand
Move
No change

Question 7 (2 pts for manual calculation; 2 pts for using Excel): Now, Steve got informed that the probability of markets are:

P(good market) = 0.60,

P(average market) = 0.25, and

P(poor market) = 0.15.

Which option should Steve choose if he uses the expected monetary value (EMV) criterion?

Question 8 (2 pts for manual calculation; 2 pts for using Excel): Based on the probabilities provided in Question 7, which option should Steve choose if he uses the expected opportunity lost (EOL) criterion?

Question 9 (2 pts for manual calculation; 2 pts for using Excel): Calculate the expected value with perfect information (EVwPI) based on the probability of the three market conditions in Question 7.

Question 10 (2 pts for manual calculation; 2 pts for using Excel): Calculate the expected value of perfect information (EVPI) based on the probability of the three market conditions in Question 7.