?Andrew? Thomas, a sandwich vendor at Hard? Rock? Cafe\'s? annual? Rockfest, cre

Question

?Andrew? Thomas, a sandwich vendor at Hard? Rock? Cafe's? annual? Rockfest, created a table of conditional values for the various? alternatives? (stocking? decision) and states of? nature? (size? of? crowd):

The probabilities associated with the states of nature are 0.30 for a? big? demand, 0.5 for an? average? demand, and 0.20 for a small demand.

??a) The alternative that provides Andrew Thomas the greatest expected monetary value? ?is.

The EMV of this decision is

??$

??(enter your answer as a? whole? number).

??b) The expected value of perfect information? ?EVPI for Andrew? Thomas? =

??$

??(enter your answer as a? whole? number).

Explanation / Answer

(a) For large stock, EMV= 22000*0.3+12000*0.5-2000*0.2=12200For Average Stock,

EMV= 14000*0.3+10000*0.5+6000*0.2=10400

For Small Stock, EMV= 9000*0.3+8000*0.5+4000*0.2=7500

Large stock provides greatest EMV of $12200

(b) EV|PI= 0.3*22000+0.5*12000+0.2*6000=13800

both answer is right

please rate me positive thanks

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