Compute the expected value of perfect information.

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Reference no: EM131688928

The manager of the greeting card section of mazey's department store is consideringher order for a particular line of Christmas Cards. The cost of each box of cards is $3;each box will be sold for $5 during the Christmas season. After Christmas, the cards willbe sold for $2 a box. The card section manager believes that all leftover cards can besold at that price. The estimated demand during Christmas season for the line ofChristmas cards, with associated probabilities, is shown as follows:

Demand (boxes) Probability

25 .10

26 .15

27 .30

28 .20

29 .15

30 .10

a. Develop the payoff table for this decision situation and compute the expected value for each alternative and identify the best decision.

b. Compute the expected value of perfect information.

(Can get a step by step breakdown not an excel solution?)

Reference no: EM131688928

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