Blackbeard’s Phantom Fireworks is considering two new bottle rockets. The company can add both to the current line, neither, or just one of the two. The success of these products depends on consumers’ reactions to the products. These reactions can be summarized as “good,” P(S1) = 0.30; “fair,” P(S2) = 0.50; or “poor,” P(S3) = 0.20. The company’s revenues, in thousands of dollars, are estimated in the following payoff table: State of Nature ($ thousands) Decision S1 S2 S3 Neither $0 $0 $0 Product 1 only 125 65 30 Product 2 only 105 60 30 Both 220 110 40

a. Compute the expected monetary value for each decision.

b. What decision would you recommend?

c. Develop an opportunity loss table.

d. Compute the expected opportunity loss for each decision.

e. Compute the expected value of perfect information.