1. 

The owner of the Humber Lakeshore Construction Company must decide among building a condo, constructing a shopping centre, or leasing all the company's equipment to another company. The profit that will result from each alternative will be determined by whether material costs remain stable, increase moderately, or increase significantly. The specialists calculated the likelihood for each possible level of material costs. In the payoff table below the estimated profitflosses are given in $thousands. Material Costs Moderate in crease Significant increase Shopping Centre 1850 Leasing Probability of State of Nature a. Compute the expected monetary value for each decision: b. Using Expected Monetary Value criterion, select the best decision. Select an answer c. Find the expected value with perfect information. d. Determine the expected value of perfect information. e. Please interpret EVPI. .. EVPI is the usual amount the company would pay for additional information -~ EVPI is the average amount the company would pay for additional information -~ EVPI is the maximum amount the company would pay for additional information -- EVPI is the minimum amount the company would pay for additional information The owner of the Humber Lakeshore Transport Company must decide among manufacturing 10 new transport trucks, manufacturing 20,000 new electric scooters, or leasing all their manufacturing equipment to another company. The profit that will result from each alternative will be determined by whether material costs remain stable, increase moderately, or increase significantly. In the payoff table below the estimated profits/losses are given in $thousands. Material Costs Moderate Stable Significant Increase Increase Transport 2100 600 2500 Decision Scooters 1800 1000 -180 Leasing 830 940 1000 (a) Construct Opportunity Loss (Regret) Table Material Costs Stable Moderate Increase Significant Increase Transport Decision | Scooters Leasing (b) Determine the best decision using the Opportunity Loss decision criterion. Decision: Leasing based on min = 60 o Decision: Scooters based on 1180 = min(3500,1180,1270) o Decision: Transport based on 3500 = max (3500,1180,1270) Decision: Transport based on 3900 = min (1480,3900,1330)