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

Find the feasible solution of transportation problem, Example: Find the fe...

Example: Find the feasible solution of followings transportation problem by VAM and optimize it by stepping stone methods. Availability of Warehouse

Focused improvement programmes - improving productivity, Focused Improvemen...

Focused Improvement Programmes - Improving Productivity Allan Lawlor (1985), Director of Action Learning Associates (ALA) suggests - based on his experiences in industry and

Would like for you to advice changes that would significant, Your boss woul...

Your boss would like for you to suggest changes that would significant shorten it. what would you suggest?

Explain what is the best production order quantity, Johnson Plastics makes ...

Johnson Plastics makes and sells, among many other things, specialty plastic display cases for retail stores. Johnsons expected demand for the display cases is 1,000 units, and ave

Problem, a firm isconsidering replacement of a machien, whoes cost price is...

a firm isconsidering replacement of a machien, whoes cost price is rs 12200 and scrap value is rs 200 the running cost is rupee given below year running cost 1 200 2 50

Explain protocols are important in medicine, Protocols are important in med...

Protocols are important in medicine. We use them anytime that a particularly important process needs to be completed in a sequential way for the benefit of our patients. What is yo

Describe maintain service quality in the expanded markets, Evaluate whether...

Evaluate whether or not Shangri La Hotel's heavy investment in employee development yields a profitable return to the company. Evaluate Shangri La Hotel at maintain service quality

Explain good healthcare lawsuit, Does anyone know a good Healthcare lawsuit...

Does anyone know a good Healthcare lawsuit that I can do an essay on. Or a website that I can pull a case from?

Explain what are the implications of this for rochem, How do the two altern...

How do the two alternative process technologies (Chemling and AFU) differ in terms of their scale and automation? What are the implications of this for Rochem?

Explain what is your personal professional strategy, What is your personal ...

What is your personal professional strategy to remain competitive in this environment as globalization increases?

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages