Deborah? Hollwager, a concessionaire for the Amway Center in? Orlando, has developed a table of conditional values for the
various alternatives? (stocking decision) and states of nature? (size of? crowd):
|
States of Nature? (size of? crowd) |
|||
|
Alternatives |
Large |
Average |
Small |
|
Large Inventory |
$20,000 |
$10,000 |
-$2,000 |
|
Average Inventory |
$15,000 |
$12,000 |
$6,000 |
|
Small Inventory |
$9,000 |
$6,000 |
$5,000 |
Probabilities associated with the states of nature are
0.30
for a large? crowd,
0.50
for an average? crowd, and
0.20
for a small crowd.
?a) The alternative that provides Deborah the greatest expected monetary value ?(EMV?) is small inventory, average or large inventory?
?
.
The EMV for this decision is
?$ enter your response here
?(enter your answer as a whole? number).
?b) For? Deborah, the expected value of perfect information?(EVPI?) ?=
?$ enter your response here
?(enter your answer as a whole? number).
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