Marcia owns a coffee shop on Main Street. She is contemplating the future of her current coffee shop. She is considering six alternative decisions: (1) sell her business and leave the coffee industry, (2) sell her current shop and open a coffee cart on College Hill, (3) maintain her current business (i.e., status quo), (4) expand hours at her current shop, (5) expand hours and retail area at her current location, and (6) relocate to a larger retail space on University Avenue Marcia's expected profit will depend on the future demand for her coffee. Her expected payoffs are as follows: Future demand for Marcia's Coffee Very High High Moderate Low Very Low Si S4 S5 2000 -1000 S3 0 1000 S2 -750 500 700 1500 D2 -500 1250 1500 800 500 250 0 Sell shop & leave industry Sell shop & open cart Status quo Expand hours Expand hours and retail area Relocate to University Avenue 1500 1400 1000 0 -500 1750 1500 1000 0 -750 DO 2500 1750 1250 -1000 -2000 Use Excel to answer the following: a. Identify Marcia's optimal decision alternative under each of the four approaches of decision making without probability. b. Suppose Marcia has the following probabilities regarding economic growth: P(S1) = 0.20, P(S2) = 0.25, P(S3) = 0.10, and P(S4) = 0.20. What is her optimal decision alternative using the Expected Value approach? c. What is Marcia's EVPI? d. If instead, Marcia believes P(Si)=0.30, P(S2) = 0.20, P(S3) = 0.15, and P(S4) = 0.25, what is her optimal decision alternative using the Expected Value approach and the corresponding EVPI? Marcia owns a coffee shop on Main Street. She is contemplating the future of her current coffee shop. She is considering six alternative decisions: (1) sell her business and leave the coffee industry, (2) sell her current shop and open a coffee cart on College Hill, (3) maintain her current business (i.e., status quo), (4) expand hours at her current shop, (5) expand hours and retail area at her current location, and (6) relocate to a larger retail space on University Avenue Marcia's expected profit will depend on the future demand for her coffee. Her expected payoffs are as follows: Future demand for Marcia's Coffee Very High High Moderate Low Very Low Si S4 S5 2000 -1000 S3 0 1000 S2 -750 500 700 1500 D2 -500 1250 1500 800 500 250 0 Sell shop & leave industry Sell shop & open cart Status quo Expand hours Expand hours and retail area Relocate to University Avenue 1500 1400 1000 0 -500 1750 1500 1000 0 -750 DO 2500 1750 1250 -1000 -2000 Use Excel to answer the following: a. Identify Marcia's optimal decision alternative under each of the four approaches of decision making without probability. b. Suppose Marcia has the following probabilities regarding economic growth: P(S1) = 0.20, P(S2) = 0.25, P(S3) = 0.10, and P(S4) = 0.20. What is her optimal decision alternative using the Expected Value approach? c. What is Marcia's EVPI? d. If instead, Marcia believes P(Si)=0.30, P(S2) = 0.20, P(S3) = 0.15, and P(S4) = 0.25, what is her optimal decision alternative using the Expected Value approach and the corresponding EVPI
