Conditional values for the different alternatives

Reference no: EM1316199

Decision making using EMV and EVPI.

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 crowed).

	States of Nature
Alternative	Large($)	Average($)	Small($)
Large Inventory	22,000	12,000	-2,000
Average Inventory	15,000	12,000	6,000
Small Inventory	9,000	6,000	5,000

If the probabilities associated with the states of nature are 0.30 for a large crowed? 0.50 for an average crowed, and 0.20 for a small crowed, determine:

(a) the alternative that provides the greatest expected monetary value (EMV)

(b) the expected value of perfect information (EVPI).

Reference no: EM1316199

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