• A.7 The following payoff table provides profits based on various possible decision alternatives and various levels of demand at Robert Klassan’s print shop:

The probability of low demand is 0.4, whereas the probability of high demand is 0.6.

a) What is the highest possible expected monetary value?

b) What is the expected value with perfect information (EVwPI)?

c) Calculate the expected value of perfect information for this situation.

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DEMAND LOW HIGH Alternative 1 $10,000 $30,000 Alternative 2 $5,000 $40,000 Alternative 3 -$2,000 $50,000