Q3. (20 points) From the Province of Prince Edward Island, the Director of Social Services has learned that new pending legislation will mandate new information requirements. This will place an additional burden on the Social Services Department. The Director has identified three alternatives to handle the expected additional workload requirements. One alternative is to reassign existing staff, the second is to hire and to train two new workers and the third is to redesign current practice so that workers can collect the information with little additional effort. An unknown factor is the caseload for the coming year when the new data will be collected on a trial basis. The estimated costs for the various options and caseloads are shown in the following table on page 3.

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		Caseload
	Moderate	High	Very High
Reassign staff	$50	$60	$85
New staff	$60	$60	$60
Reassign data collection	$40	$50	$90
*costs in thousands

The Director of Social Services has decided that reasonable caseload probabilities are 0.10 for moderate, 0.30 for high, and 0.60 for very high.

a) Which alternative will yield the minimum expected cost?

b) Create decision tree for this problem and solve it.

c) Determine the expected value of perfect information.

d) Suppose the Director has an option of hiring an additional worker if one worker is hired initially and the caseload turns out to be high or very high. Under that plan, the cost if moderate will be $40,000, the cost if demand is high will be $70,000, and the cost if demand is very high will also be $70,000. Construct a decision tree that shows this additional alternative and determine which alternative will minimize expected cost.