Shown here is a decision table from a business situation. The decision-maker has an opportunity to purchase sample information in the form of a forecast. With the sample information, the prior probabilities can be revised. Also shown are the probabilities of forecasts from the sample information for each state of nature. Use this information to answer parts (a) through (d).a. Compute the EMV of this decision without sample information.b. Compute the EMV of this decision with sample information.c. Use a decision tree to show the decision options in parts (a) and (b).d. Calculate the EMV of the sample information.

Transcribed Image Text:

Alternative Forecast d₁ d₂ $1 $2 State of Nature S₁ (0.30) $350 -$200 $₂ (0.70) -$100 $325 State of Nature $1 0.90 0.10 $2 0.25 0.75