QUESTION 5

1. A plant manager considers the operational cost per hour of five machine alternatives. The cost per hour is sensitive to three potential weather conditions: cold, mild, and warm. The following table represents the operations cost per hour for each alternative-state of nature combination:
3. Alternatives
4. States of Nature
6. EMV
7. Weather related cost per hour
8. Cold cost/day
9. Mild cost/day
10. Warm cost/day
11. Machine 1
12. $42
13. $40
14. $45
16. Machine 2
17. $45
18. $42
19. $47
21. Machine 3
22. $40
23. $35
24. $54
26. Machine 4
27. $60
28. $30
29. $48
31. Machine 5
32. $45
33. $40
34. $45
37. 0.3
38. 0.5
39. 0.2
42. Assume that for a randomly selected day, there is a 30% probability of cold weather, 50% probability of mild weather, and 20% probability of warm weather. What is the EVPI?