In Problem 5.8, assume that the grower’s loss incurred with the burners would be $17,500 and that the loss incurred with the sprinklers would be $27,500.
a. Find EVPI for the weather conditions (freeze or not).
b. Now assume that the loss incurred with the burners is uniformly distributed between $15,000 and $20,000. Also assume that the loss incurred with the sprinklers is uniformly distributed between $25,000 and $30,000. Now estimate EVPI regarding these losses, under the assumption that a better weather forecast cannot be obtained.
c. Do you think the farmer should put more effort into learning his costs more precisely or should he concentrate on obtaining better weather forecasts?