Question
A concessionaire for the local ballpark has developed a table of conditional values for the various alternatives (stocking decisions) and states of nature (size of
A concessionaire for the local ballpark has developed a table of conditional values for the various alternatives (stocking decisions) and states of nature (size of crowd). Stocking Decision Large Crowd ($) Average Crowd ($) Small Crowd ($) Large Inventory $22,000 $12,000 -$2,000 Average Inventory $15,000 $12,000 $6,000 Small Inventory $9,000 $6,000 $5,000 If the probabilities associated with the states of nature are 0.30 for a large crowd, 0.50 for an average crowd, and 0.20 for a small crowd, determine: 1. The alternative that provides the greatest expected monetary value (EMV). 2. The expected value of perfect information (EVPI).
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