1.

Use the given decision tree to answer the questions that follow. Payoffs are profits/losses. 91 10.75) -$1.200 $15,000 C -$3,200 B 82 (0.25) $17,700 a a) The expected value at node A, EV(A) is $ b) The expected value at node B, EV (B) is $ c) The expected value at node C, EV(C) is $ d) The expected value with perfect information, EVwithPI is $ e) The expected value of perfect information, EVPI is $A medical equipment manufacturer must decide whether to manufacture a new component in-house, or purchase it from an external supplier, or do neither. Their success will depend on the severity of the second wave of an impending pandemic. Experts have predicted that there is a 0.56 chance that the second wave will be severe and a 0.44 chance that it will be mild. If the second wave is severe, the company will earn $0.65 million in profits if they manufacture, and $0.2 million if they purchase. If the second wave is mild, the company will lose $175,000 if they manufacture but still earn $68,000 in profits if they purchase. a) Select the decision tree below that best represents this decision problem. b) What is the optimal expected monetary value of this decision? $ c) Based on expected values, what is the best decision for this company? O Manufacture or Purchase O Choose mild O Manufacture O Choose severe O Do nothing O PurchaseGiven the following profit payoff table: 110 100 340 270 -10 290 160 -90 370 1. Construct an opportunity loss (regret) table by completing the following table. 51 d2 da 2. Given the probabilities of the states of nature are P(s] ) = 0.2, P($2) = 0.3, and P($3) = 0.5, calculate the minimum expected opportunity loss. Minimum EOL = 3. What is the best alternative based on expected opportunity loss? di d2 d3 4. What is the EVPI