Calculate:a. Expected value of perfect informationb. Minimax regret value A company is considering the possibility of opening asmall dress shop in Dubai. He has located Dubai becauseit attracts many visitors. The options for the company areto open a small shop, a medium-sized shop, or no shop atall. The market for a dress shop can be good, average, orbad. The probabilities for these three possibilities are0.10 for a good market, 0.50 for an average market, andthe rest for a bad market. The net profit or loss figures forthe medium-sized and small shops for the various marketconditions are given in the following table. Building noshop at all yields no loss and no gain. Medium ShopSmall ShopNo shopSTATE OF MATKETAverage Market(S)Good Market(S)40020002601600Bad Market (S)-60-300

a. Note: The values in bracket indicate negative values.

Answered: Calculate: a. Expected value of…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 46P

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Calculate: a. Expected value of perfect information b. Minimax regret value