Humber Tech is now considering hiring ALBION consultants for information regarding the city's market potential. ALBION Consultants will give either a favourable (F) or unfavourable (U) report. The probability of ALBION giving a favourable report is 0.55. If ALBION gives a favourable report, the probability of high market potential is 0.54 while the probability of a low market potential is 0.08. If ALBION gives an unfavourable report, the probability of high market potential is 0.14 and that of low market potential 0.5.

 

4. What is the expected value of the sample information (EVSI) provided by ALBION? $ 

 

5. Based on the EVSI, should Humber Tech pay $410 for the sample information? Select an answer

 

Yes, they should.

 

No, they should not.

 Correct

 

 

 

6. What is the efficiency of the sample information? Round % to 1 decimal place. %

Humber Tech is considering starting either a small, regular, or large tech store in Etobicoke. The type of store they open depends on the city's market potential which may be high with 30% chance, medium with 40% chance, or low with 30% chance. The potential profits ($) in each case are shown in the payoff table below. High Medium Low Small 4200 4200 900 Regular Large 5900 5100 -700 7000 3400 -200 Part A 1. What is the best expected payoff and the corresponding decision using the Expected Monetary Value (EMV) approach? $ Select an answer 2. What is the expected value of perfect information (EVPI)?