Compute the expected value of perfect information

Assignment Help Operation Management

Reference no: EM131360268

Problem -

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):

Alternatives	States of Natures (Demand)
Alternatives	Big	Average	Small
Large stock	$22,000	$12,000	-$2,000
Average stock	$14,000	$10,000	$6,000
Small stock	$ 9,000	$ 8,000	$4,000

The probabilities associated with the states of nature are 0.3 for a big demand, 0.5 for an average demand, and 0.2 for a small demand.

a) Determine the alternative that provides Andrew the greatest expected monetary value (EMV).

b) Compute the expected value of perfect information (EVPI).

Reference no: EM131360268

Questions Cloud

Unique lens regarding the global threat scape : This week we are going to look at illicit finance through a unique lens regarding the global threat scape's confluence with specific learning environment. Recently the library gained the rights to a new database by the International Institute for..

What are the main purposes of a proposal : Most business professionals write reports of various types. One of the most common is the proposal. A proposal can be in the form of an email, a lengthy memo like the Ethics

Account pays an interest rate : Your grandmother has been putting $3,000 into a savings account on every birthday since your first (that is, when you turned 1). The account pays an interest rate of 3%.

Describe the symptoms of pedophilic disorder : Describe the symptoms of pedophilic disorder and explain why pedophiles are so dangerous. Some states require that pedophiles remain incarcerated after their sentence ends if they have not successfully completed treatment for their condition.

Compute the expected value of perfect information : 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): Compute the expected value of perfect information (EV..

Find out the csr performed by the company : Find out the CSR performed by the Company and the level of activeness projected by Company in this area?- Estimate the impact of the CSR activities on the financial performance of the company and consumer satisfaction?

Financial statements for the most recent year : Download 10K financial statements for the most recent year for Brinker. A good source is the company's home page. Also compare the Brinker ratios to the industry averages and comment on significant differences.

What type of treatment would you suggest : Your manager asks you to see a client who appears to be decompensating. He has stopped coming to the center and his wife asks you for assistance. She says he is not eating, sleeps all day and rarely gets out of the house. He is talking gibberish t..

Amount of the dividends paid : At the beginning of the year, the firm had retained earnings of $172,270 and common stock of $260,000. At the end of the year, retained earnings was $158,713 and common stock was $280,000. Any tax losses can be used. What is the amount of the divi..

User Account

All Pages