Lakeshore Manufacturing must decide whether to set their production capacity next quarter to small, medium or large while hoping that a looming employee strike will not actually materialize. Their projected annual profits $('000) depend on the event of the strike as follows:

	No strike	Strike
Small	430	420
Medium	480	350
Large	810	-250
ProbabilityProbability	0.5	0.5

Part A 1. What is the best expected payoff and the corresponding decision using the Expected Monetary Value (EMV) approach? $('000) Select an answer Small Medium Large 2. What is the expected value of perfect information (EVPI)? $('000) Part B Lakeshore can hire a labour researcher for a $11,500 to obtain further information on the possibility of a strike. The researcher's report will either be favourable or unfavourable. The probability estimates are: Probability of an unfavorable report = 0.45 Probability of no strike given a favorable report = 0.64 Probability of a strike given an unfavorable report = 0.58 1. If the researcher gives a favourable report, what is the expected value of the optimal decision? $

Hint: Payoffs are in thousand dollars. Answer is required in dollars.

2. If the researcher gives an unfavourable report, what is the expected value of the optimal decision? $ 3. What is the expected value with sample information (EVwSI) provided by the researcher? $ 4. How much should Lakeshore pay the researcher, at most? $ 5. Based on the EVSI, should Lakeshore pay $11,500 for the sample information? Select an answer Yes, they should. No, they should not. 6. What is the efficiency of the sample information? Round % to 1 decimal place.