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 importance of strategic management, In light of the various theorie...

In light of the various theories of Strategic Management and Competition touched on in this course (e.g., the Resource Model of the Firm, internal/external analysis, SWOT, Value Ch

Describe human resource management, The impact Spurlock v. United Airlines ...

The impact Spurlock v. United Airlines (1972) has made to Human Resource Management.

Explain main reasons businesses safe guard the environment, What are the ma...

What are the main reasons businesses don't conserve natural resources or safe guard the environment?

Explain how can healthcare service providers avoid claims, Part I: Avoid cl...

Part I: Avoid claims rejections A payer may delay or deny payment because of inaccurate or missing information in a submitted claim. Many contracts require payment within a spec

Explain what should peter recommend to gwyn, What should Peter recommend to...

What should Peter recommend to Gwyn about Dana's case?

Facility Location, Steps in location Selection.

Steps in location Selection.

Explain network technologies to gain a competitive advantage, 1. How could ...

1. How could Denver B-cycles use other wired or wireless network technologies to gain a competitive advantage? 2. What Information not described in the case can Denver B-cycle u

Explain what are average weekly total costs, Given the following data for a...

Given the following data for a particular inventory item: Usage 500 units/week Ordering $40 per order Carrying Cost $.01 per unit per week Lead Time 3 weeks Price $.50 per unit a.

Could you please explain which values i need to calculate, Regarding the tr...

Regarding the trash bag case (Essentials of Business Statistics, chapter 7 exercise 50), I am not sure where the 1.9991 comes from. I tired computing the standard normal distrib

Explain advances in technology have allowed hr services, Advances in techno...

Advances in technology have allowed HR services to be offered more on a self-service basis than in the past. True False

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages