a. A small retailer began as a mom-and-pop operation selling crafts and consignment items. During the past two years, the store’s volume grew significantly. The owners are trying to decide whether to purchase an automated checkout system. The store’s present manual system is slow. They are concerned about lost business due to inability to ring up sales quickly. The automated system would also offer some accounting and inventoryadvantages. The problem is that the automated system carries a large fixed cost, and the owners feel that sales volume would have to grow to justify the cost. The following decision table contains the decision alternatives for this situation, the possible states of future sales, prior probabilities of those states occurring, and the payoffs. Use this information to compute the expected monetary payoffs for the alternatives.b. For a fee, the owners can purchase a sales forecast for the near future. The forecast is not always perfect. The probabilities of these forecasts being correct for particular states of sales are shown here. Use these probabilities to revise the prior state probabilities. Compute the EMV on the basis of sample information. Determine the value of the sample information.

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Decision Alternative Automate Don't Automate State of Sales Reduction Constant (0.15) (0.35) -$40,000 -$15,000 $5,000 $10,000 Increase (0.50) $60,000 -$30,000