Question
(Use the DT above) What is the expected value of perfect information for Delivery Time Decrease? What is the value of control for Delivery Time
(Use the DT above) What is the expected value of perfect information for ‘Delivery Time Decrease’? What is the value of control for ‘Delivery Time Decrease’?
Q8. (Use the DT above) A consulting firm, McKinsey & Company, gives some idea about market response forecasting. Their prediction accuracy about market response is known as 90%. That is, probability that Event A actually occurs given that McKinsey & Company says Event A will occur is 0.9. That is P(A | “A”) = 0.9, and P(AC | “AC”) = 0.9.
1) Draw an influence diagram with the market response forecasting node and its relationship with market response.
2) If you are a CEO of Amazon, what is your maximum willingness to pay (value of imperfect information) for the McKinsey & Company’ prediction for market response?
Suppose that the decision tree for the situation is: Amazon Anticipatory Shipping Yes No Implement? 10 TRUE -100 FALSE 0 High Delivery Time Decrease 10 Low 50.0% 0.0% 0 0 50.0% 0 High Market Response Low High 64 Market Response Low -44 80.0% 200 20.0% 20 20.0% 200 80.0% 20 40.0% 100 10.0% -80 10.0% 100 40.0% -80
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Question 7 Expected value of perfect information EVPI for Delivery Time Decrease The EVPI for Delivery Time Decrease is the difference between the expected value of the optimal decision made with perf...Get Instant Access to Expert-Tailored Solutions
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