A farmer is attempting to decide which of three crops he should plant on his 100 acre farm. The profit from each crop is strongly dependent on the rainfall during the growing season. He has categorized the amount of the rainfall as substantial, moderate or light. He estimates his profit for each crop as shown in the table below (5 points):

Types of crop

Estimated Profit (Br) depending on rainfall

Substantial

Moderate

Light

Crop A

Crop B

Crop C

7,000

2,500

4,000

3,500

3,500

4,000

1,000

4,000

3,000

Based on the weather in previous seasons and the current projection for the coming season, he estimates the probability of substantial rainfall as 0.2, that of moderate rainfall as 0.3 and that of light rainfall as 0.5.

a. Compute the expected value for each alternative crop type and select the best one.

b. Develop the opportunity loss table and compute the expected opportunity loss for each decision and select the best one.