Decision-maximizing expected value

Reference no: EM13102532

The concessions manager at the Clemson vs. USC football game must decide whether to have the vendors sell sun visors or umbrellas. There is a 30% chance of rain, a 15% chance of overcast skies, and a 55% chance of sunshine, according to weather forecasts for the Columbia SC on game day. The manager estimates that the following profits will result from each decision, given each set of weather conditions:

Weather Conditions

Decision Rain Overcast Sunshine

Prob. .30 .15 .55

Sun visors $-500 $-200 $1,500

Umbrella 2,000 0 -900

Compute the expected value for each decision and select the best one.

Reference no: EM13102532

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