TEST 3. DECISION ANALYSIS. (10 Marks) Direction: Read, Analyze and calculate what are required. Rubrics for marking: (a) 1 Marks = Correct steps to find the EMV. (C) 1Marks = Correct steps to find the minimax criterion 1 Mark = Correct final answer 1Marks = Correct steps to find the minimum EOL (b) 3Marks = Correct steps to find the EVP 2 Mark = Choose the best alternative 1 Mark = Correct final answer Mary is considering the possibility of opening a small dress shop on Avenue, a few blocks from the university. She has located a good mall that attracts students. Her options are to open a small shop, a medium-sized shop, or no shop at all. The market for a dress shop can be good, average, or bad. The probabilities for these three possibilities are 0.2 for a good market, 0.5 for an average market, and 0.3 for a bad market. The net profit or loss for the medium-sized and small shops for the various market conditions are given in the following table. Building no shop at all yields no loss and no gain. Alternative Good Market Average Market Bad Market Small shop 30,000 75,000 -40,000 Medium Sized shop 55,000 80,000 -60,000 No shop 0 0 0 a. Calculate the EMV criterion (2Marks) b. Prepare the EVPI. (4 Marks) c. Develop the opportunity loss table for this situation. What decisions would be made using the minimum EOL criterion? (4 Marks)