Chris Suit is administrator for Lowell Hospital. She is trying to determine whet

Question

Chris Suit is administrator for Lowell Hospital. She is trying to determine whether to build a large wing on the existing hospital, a small wing or no wing at all.

POPULATION TREND

Growth Stable

Build large wing 150 thousand - 85 thousand

Build small wing 60 thousand -45 thousand

do not build 0 0

Assuming that each state of nature has the same lielihood, determine the best alternative.

The best alternative is to (build large wing, small wing, or not build), with an EMV= $ ____ thosand (round to one decimal place)

PLEASE EXPLAIN ANSWER

Explanation / Answer

For building larger wing , expected monetary value,

EMV = (150 - 85 )/ 2 = 65/2 = 32.5

For building Smaller Wing,

EMV = (60 - 45) / 2 = 7.5

for No build,

EMV = 0 ..................

SO, the best alternative is Build a large wing, with an EMV of 32.5

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