What decision should Lake Placid make using the expected value approach?

Identify the risk profiles for the medium and large alternatives.

$($i$)$

$($ii$)$

$($iii$)$

Risk profile for medium$-$size community center:

Risk profile for large$-$size community center:

Given the mayor's concern over the possibility of losing money and the result of part $($a$),$ which alternative would you recommend?

Compute the expected value of perfect information.

EVPI $=$ $ fill in the blank $5$

Do you think it would be worth trying to obtain additional information concerning which scenario is likely to occur?

Best decision:

Suppose the probability of the worst$-$case scenario increases to $0\mathrm{.}2,$ the probability of the base$-$case scenario decreases to $0\mathrm{.}5,$ and the probability of the best$-$case scenario remains at $0\mathrm{.}3.$ What effect, if any, would these changes have on the decision recommendation?

The consultant has suggested that an expenditure of $$150,000$ on a promotional campaign over the planning horizon will effectively reduce the probability of the worst$-$case scenario to zero. If the campaign can be expected to also increase the probability of the best$-$case scenario to $0\mathrm{.}4,$ is it a good investment?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.