Fruit Computer Company manufactures memory chips in lots of ten chips. From past experience, Fruit knows that 80% of all lots contain 10% (1 out of 10) defective chips, and 20%

of all lots contain 50% (5 out of 10) defective chips. If a good (that is, 10% defective) batch of chips is sent on to the next stage of production, processing costs of $1,000 are incurred, and if a bad batch (50% defective) is sent on to the next stage of production, processing costs of

$4,000 are incurred. Fruit also has the alternative of reworking a batch at a cost of $1,000. A reworked batch is sure to be a good batch. Alternatively, for a cost of $100, Fruit can test one chip from each batch in an attempt to determine whether the batch is defective. Determine how Fruit can minimize the expected total cost per batch. Also compute EVSI and EVPI