The Friendlys in Problem 25 are considering hiring a petroleum analyst to determine the future availability of gasoline. The analyst will report that either a shortage or a surplus will occur. The probability that the analyst will indicate a shortage, given that a shortage actually occurs is .90;

the probability that the analyst will indicate a surplus, given that a surplus actually occurs is .70.

a. Determine the decision strategy the Friendlys should follow, the expected value of this strategy, and the maximum amount the Friendlys should pay for the analyst’s services.

b. Compute the efficiency of the sample information for the Friendly car dealership.

 LO.1