APC industries has been experiencing significant growth and has been having difficulty meeting customer demands recently. They are considering three options to address this issue. They can move to a larger facility, add a second shift or use a subcontractor to assist in production. The annual payoff of each option depends on if the current market continues to expand hold s steady or decline. The expected payoff for each combination is shown in the table below Option Expand Steady Decline Move to larger city 250,000 125,000 -90,000 Add a second shift 175,000 80,000 -45,000 Subcontract 90,000 15,000 -10,000 What are the most that the APC should be willing to pay for additional informatio
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
APC industries has been experiencing significant growth and has been having difficulty meeting customer demands recently. They are considering three options to address this issue. They can move to a larger facility, add a second shift or use a subcontractor to assist in production. The annual payoff of
each option depends on if the current market continues to expand hold s steady or decline. The expected payoff for each combination is shown in the table below
| Option | Expand | Steady | Decline |
| Move to larger city | 250,000 | 125,000 | -90,000 |
| Add a second shift | 175,000 | 80,000 | -45,000 |
| Subcontract | 90,000 | 15,000 | -10,000 |
What are the most that the APC should be willing to pay for additional information? Use
Expected Regret
Use the alternative method to verify EVPI
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