A concessionaire for the local ballpark has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd). If the probabilities associated with the states of nature are 0.30 for a large crowd, 0.50 for an average crowd, and 0.20 for a small crowd, determine:
(a) the alternative that provides the greatest expected monetary value (EMV)
(b) the expected value of perfect information (EVPI)

Question

A concessionaire for the local ballpark has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd).  If the probabilities associated with the states of nature are 0.30 for a large crowd, 0.50 for an average crowd, and 0.20 for a small crowd, determine:
(a) the alternative that provides the greatest expected monetary value (EMV)
(b) the expected value of perfect information (EVPI)

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The Answer of A concessionaire for the local ballpark has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd).  If the probabilities associated with the states of nature are 0.30 for a large crowd, 0.50 for an average crowd, and 0.20 for a small crowd, determine:
(a) the alternative that provides the greatest expected monetary value (EMV)
(b) the expected value of perfect information (EVPI)

A Concessionaire for the Local Ballpark Has Developed a Table