Calculate the expected value of perfect information, Operation Management

Assignment Help:

Clay Why bark, a soft-drink vendor at Hard Rock Cafe%u2019s annual Rockfest, created a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd)-

States of Nature (demand)

Alternatives Big Average Small

Large stock $24,000 $10,000 -$1,500

Average stock $16,000 $11,000 $6,500

Small stock $ 9,600 $ 8,000 $3,200

The probabilities associated with the states of nature are 0.25 for a big demand, 0.55 for an average demand, and 0.20 for a small demand.

a) Determine the alternative that provides Clay Why bark the greatest expected monetary value (EMV). (Large, Average or small stock)

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

Related Discussions:- Calculate the expected value of perfect information

Explain veronique to improve the process, What suggestions would you make t...

What suggestions would you make to Veronique to improve the process?

Factors determining production control, Factors Determining Production Cont...

Factors Determining Production Control 1. Nature of Production: In job oriented manufacturing products and operations designed for some particular order which may or may not b

Linear programming, classification of linear programming on the basis of st...

classification of linear programming on the basis of structure

Depict a project network for the activities, A senior MIS design class proj...

A senior MIS design class project team has developed the following schedule of activities for their project, using their best estimate of completion times. Both written and oral re

Briefly explain the matrix form of organization design, Briefly describe th...

Briefly describe the matrix form of organization design. List its advantages and disadvantages. This structural form is most likely to be used under what conditions?

Present a crisis management consulting report, Scenario You have been ...

Scenario You have been recently appointed as a crisis manager for a large shared centre located in New York. The main reason for you to be present as a manager is a very high

What skills will you require to work effectively, What skills will you need...

What skills will you need to work effectively in a strategic alliance organizations?

Developing an layout, What is the difference in strategy in developing an i...

What is the difference in strategy in developing an initial layout for a new facility as comparedn to the strategy in improving the layout of an existing facility?

The owners it person has alerted him to several problems, The graphic desig...

The graphic design shop where you work as the Account Manager is doing well. Just last year, the owner hired three new designers and a receptionist, bringing the total number of em

Outline suggestions for stimulate strategic entrepreneurship, As the invest...

As the investment community watches to see if Blockbuster will be able to sustain a double-digit growth rate under the new direction, the CEO is reviewing his actions as the strate

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages