The recent COVID 19 chaos in Hong Kong has triggered Johnson Tam, an entrepreneur, to consider...

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The recent COVID 19 chaos in Hong Kong has triggered Johnson Tam, an entrepreneur, to consider investing in a local surgical mask manufacturing plant Johnson's problem is to decide bow large his plant should be. The annual returns will depend on both the size of his plant and a number of marketing factors related to the health situation of the Hong Kong society. After a careful analysis, Johnson developed the following payoff table: Size of plant Small Medium Large Very Large Good market (S) Fair market (5) 100,0 30,0 00 00 150,0 00 200,000 300,000 b) What is the maximax decision ? (1 mark) c) What is the maximin decision 7 (1 mark) 50,0 00 11. 50,0 00 30,0 00 d) What is the equally likely decision ? (1 mark) Poor market ($) -10,000 For example, if Johnson constructs a small plant and the market is good, he will realise a profit of $100,000. a) Develop a decision table. (4 marks) -30,000 -70,000 -200,000 e) Assume each outcome is equally likely, I. Develop a decision tree with the expected monetary value (EMV) (5 marks) Calculate the expected value of perfect information (EVPI) (3 marks) Help Johnson to write a short note (40 to 50 words) to convince the Board of Di- rectors to buy the perfect information that is available at $30,000 (5 marks) The recent COVID 19 chaos in Hong Kong has triggered Johnson Tam, an entrepreneur, to consider investing in a local surgical mask manufacturing plant Johnson's problem is to decide bow large his plant should be. The annual returns will depend on both the size of his plant and a number of marketing factors related to the health situation of the Hong Kong society. After a careful analysis, Johnson developed the following payoff table: Size of plant Small Medium Large Very Large Good market (S) Fair market (5) 100,0 30,0 00 00 150,0 00 200,000 300,000 b) What is the maximax decision ? (1 mark) c) What is the maximin decision 7 (1 mark) 50,0 00 11. 50,0 00 30,0 00 d) What is the equally likely decision ? (1 mark) Poor market ($) -10,000 For example, if Johnson constructs a small plant and the market is good, he will realise a profit of $100,000. a) Develop a decision table. (4 marks) -30,000 -70,000 -200,000 e) Assume each outcome is equally likely, I. Develop a decision tree with the expected monetary value (EMV) (5 marks) Calculate the expected value of perfect information (EVPI) (3 marks) Help Johnson to write a short note (40 to 50 words) to convince the Board of Di- rectors to buy the perfect information that is available at $30,000 (5 marks)