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)

Quizplus · Accepted Answer

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