Kallie Inc. ,a small parts manufacturer,has just engineered a new product for the automotive industry.In order to produce the part the company can expand existing facilities,acquire a competitor,or subcontract production.The company believes the product will either experience high market demand or low market demand,with probabilities of 0.6 and 0.4,respectively.The following payoff table describes the company's decision situation. The expected value of perfect information for Kallie Inc.is
A)$1,210,000.
B)$700,000.
C)$510,000.
D)$312,500.

Question

Kallie Inc. ,a small parts manufacturer,has just engineered a new product for the automotive industry.In order to produce the part the company can expand existing facilities,acquire a competitor,or subcontract production.The company believes the product will either experience high market demand or low market demand,with probabilities of 0.6 and 0.4,respectively.The following payoff table describes the company's decision situation.  The expected value of perfect information for Kallie Inc.is
A)$1,210,000. 
B)$700,000. 
C)$510,000. 
D)$312,500.

Quizplus · Accepted Answer

The Answer of Kallie Inc. ,a small parts manufacturer,has just engineered a new product for the automotive industry.In order to produce the part the company can expand existing facilities,acquire a competitor,or subcontract production.The company believes the product will either experience high market demand or low market demand,with probabilities of 0.6 and 0.4,respectively.The following payoff table describes the company's decision situation.  The expected value of perfect information for Kallie Inc.is
A)$1,210,000. 
B)$700,000. 
C)$510,000. 
D)$312,500.