How many private ski instructors to hire for ski season

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The director of ski school at a large resort must decide how many private ski instructors to hire for ski season. Her goal is to maximize expected revenue per day. Each ski instructor earns $95 per day, and gets paid for showing up even if there are no students to teach. The demand for classes varies each day. Last season, the demand for private lessons varied between five and ten, with five instructors required on 8 days, six required on 15 days, seven required on 24 days, eight required on 17 days, nine required on 12 days, and ten instructors required on 5 days. Each ski student spends $250 for a full day private lesson with an instructor.

a) According to EV, how many instructors should the director hire?

b) Calculate the EVPI. Should the director invest $350 in a study that would accurately predict the number of private lessons?

Reference no: EM132208793

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