4. Janet Smith manages the PQR Drilling Products, a company that manufactures certain valves for oil field equipment. Due to rising activity in the oil fields the last few weeks, demand for these valves has increased steadily over the last few weeks, encouraging Ms. Smith to open a new production facility, either in Oklahoma, Louisiana, or Texas. The exact location in either state is not yet clear, so Ms. Smith and advisees have labeled the locations as A, B, and C, respectively. It is expected that demand will be low, medium, or high with estimated probabilities 20%, 30%, and 50%. Moreover, the monthly payout in thousands for the constructed Oklahoma site (A) is $90, $115, and $155 according to demand being low, medium, or high. The corresponding payouts if the chosen site is Louisiana (B) are $95, $105, and $145 for the same demand sequence. It also has been determined that the consecutive payouts for demand at the Texas location (C) are $115, $125, and $135. (a) Which location should be selected based on the minimax regret criterion? (b) Which location should be selected for maximizing the expected payouts? (c) Which location will minimize the expected opportunity loss? (d) How much is a perfect forecast of demand worth? (e) What is the most Ms. Smith would be willing to pay for a newsletter that claims to be very good at predicting the demand for oil in the South? 4. Janet Smith manages the PQR Drilling Products, a company that manufactures certain valves for oil field equipment. Due to rising activity in the oil fields the last few weeks, demand for these valves has increased steadily over the last few weeks, encouraging Ms. Smith to open a new production facility, either in Oklahoma, Louisiana, or Texas. The exact location in either state is not yet clear, so Ms. Smith and advisees have labeled the locations as A, B, and C, respectively. It is expected that demand will be low, medium, or high with estimated probabilities 20%, 30%, and 50%. Moreover, the monthly payout in thousands for the constructed Oklahoma site (A) is $90, $115, and $155 according to demand being low, medium, or high. The corresponding payouts if the chosen site is Louisiana (B) are $95, $105, and $145 for the same demand sequence. It also has been determined that the consecutive payouts for demand at the Texas location (C) are $115, $125, and $135. (a) Which location should be selected based on the minimax regret criterion? (b) Which location should be selected for maximizing the expected payouts? (c) Which location will minimize the expected opportunity loss? (d) How much is a perfect forecast of demand worth? (e) What is the most Ms. Smith would be willing to pay for a newsletter that claims to be very good at predicting the demand for oil in the South