A U.S.-based manufacturer of personal computers is planning to build a new manufacturing and distribution facility in one of the countries: China, the Philippines, or Mexico. The eventual benefit of the facility will differ between countries and will even vary within countries depending on the economic and political climate. The company has estimated the expected total profit (in millions of dollars) for the facility in each country under three different future economic/political climates, as follows:

Country Improvement Same Decline

China 21.4 17.5 16.2

Philippines 23.8 16.5 17.8

Mexico 24.2 21.0 14.0

assume that the probability of improvement in economic/political climate is 0.4, the probability of same economic/political climate is 0.2, and the probability of decline in economic/political climate is 0.4.

(a) Calculate the expected value of each decision alternative. What is your recommendation using the expected value criterion?

(b) Calculate the expected opportunity loss value of each decision alternative. What is your recommendation using the expected opportunity loss criterion?

(c) Calculate and interpret the value of perfect information.