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Subway is about to open a new store. Three locations are under consideration, with possible outcomes (depending on demand) as shown in the table below.

Subway is about to open a new store. Three locations are under consideration, with possible outcomes (depending on demand) as shown in the table below. The three states of demand have different probabilities as presented in the table.

Demand

Location

Low (30%)

Medium (45%)

High (25%)

Large

15

40

70

Medium

20

35

65

Small

25

30

50

Answer the following two questions.

- A. B. C. D. E. F. G. H. I. J. K. L.

Which decision gives the highest expected monetary value?

- A. B. C. D. E. F. G. H. I. J. K. L.

What is the expected value of perfect information?

A.

Small

B.

Medium

C.

Large

D.

Small or Large

E.

Small or Medium

F.

Medium or Large

G.

3

H.

5

I.

6

J.

8

K.

11

L.

14

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