Reference no: EM131115802

A manufacturing company must decide whether to manufacture a component part. The consulting profit is dependent upon the demand for the product. The following show the projected profit ( in thousands of dollars).

Low demand	Medium demand	High demand
Decision Alternative	S1	S2	S3
Manufacture, d1	-20	40	100
Purchase, d2	10	45	70

P(S1)= 0.35

P(S2)=0.35

P(S3)=0.3

1) Use EVPI to determine whether the company should attempt to obtain a better estimate of demand.

2) A market study of the potential demand for the product is expected to report a favorable (F) or unfavorable (U) condition

P(F|S1)=0.1

P(F|S2)=0.4

P(F|S3)=0.6

what is the probability that the market research report will be favorable?

3) What is the expected value of sample information (EVSI)?

Please only type answer on word document