Suppose that a company is developing a new touch-screen cell phone. Historically, 70% of their new phones have resulted in high consumer demand, whereas 30% have resulted in low consumer demand. The company has the decision of choosing between two models with different features that require different amount of investment and have different sales potential. Estimated profit/loss are shown in the payoff table below.

	State of Nature
	High demand, ($)	Low demand, ($)
Model 1	300,000	-40,000
Model 2	275,000	-15000

Now suppose the firm conducts a market research study to obtain sample information and better understand the nature of consumer demand. The market research cost $10,000 Analysis of past market research studies, conducted prior to introducing similar products, has found that the survey response will be either high or low. There is a 69% chance that the survey will return a high survey response (results) and there is a 31% chance that the survey will result in lo-demand response (results). The relevant conditional probabilities are as follows:

P (high consumer demand, high survey response = 0.913)

P (low consumer demand, low survey response = 0.087)

P (high consumer demand, high survey response = 0.226)

P (low consumer demand, low survey response = 0.774)

1. Calculate the expected value of sample information (EVSI).
2. Develop a decision tree and analyze using QM for Windows.
3. Determine the optimal solution.