77 The following payoff table provides profits basedon various possible decision alternatives and various levels ofdemand at Robert Klassan's print shop:DEMANDLOWHIGHAlternative 1$10,000$30,000Alternative 2$ 5.000$40,000WhicAlternative 3-$2,000$50,000payoThe probability of low demand is 0.4, whereas the probability ofhigh demand is 0.6.a) What is the highest possible expected monetary value?b) What is the expected value with perfect information (EVWPI)?c) Calculate the expected value of perfect information for thissituation, Pxin prdepahowoperaagerand

I solved all three questions as one part.

Answered: DEMAND LOW HIGH Alternative 1 $10,000 $…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

See similar textbooks

Similar questions

The following payoff table provides profits based on various possible decision alternatives and various levels of demand. ALTERNATIVE DEMAND LOW MEDIUM HIGH Alternative 1 40 80 150 Alternative 2 80 120 130 Alternative 3 100 100 100 a. Which alternative would a pessimist choose? b. Which alternative would an optimist choose? c. Which alternative should be chosen using the Hurwicz decision criterion with α = 0.4?
A company is facing three types of decisions for the purchasing of a seasonal product. The profitprojection may depend on the demand level. The payoffs for the situations are given in the followingtable:DemandDecision High (s1) Medium (s2) Low (s3)d1 60 60 50d2 80 80 30d3 100 70 101. If the prior probabilities are 0.3, 0.3, and 0.4, respectively, what is the recommended decision?Show all the calculations and answer with a decision tree.2. At each preseason sales meeting, the vice president of sales provides a personal opinion regarding potential demand for the product. The prediction of the vice president have alwaysbeen either excellent (E) or very good (G). Posterior probabilities are as follows.P(V)=0.7; P(E)=0.3P(s1|E)=0.34; P(s1|V)=0.2P(s2|E)=0.32; P(s2|V)=0.26;Use a decision tree to give the optimal decision strategy.43. Give the EVPI and the EOL, and EVSI.4. Suppose that the prior probability of a low demand is always fixed to 0.4, give a sensitivityanalysis on the other…
An investor has a certain amount of money available to invest now. Three alternative investments are available. The estimated profit in Kwacha of each investment under each economic condition are indicated in the following payoff table: Event Investment Selection A B CEconomy declines 500 -2000 -7000No charge 1000 2000 -1000Economy Expand 2000 5000 20,000Based on his own past experience, the investor assigns the following probabilities to eacheconomic condition: P (Economy declines) = 0.30 P (No change) = 0.50 P (Economy expands) = 0.20 i. Determine the optimal action based on the maximax criterion.ii. Determine the optimal action based on the maximin criterion.iii. Compute the expected monetary value (EMV) for…
An investor has a certain amount of money available to invest now. Three alternative investments are available. The estimated profit in Kwacha of each investment under each economic condition are indicated in the following payoff table: Event Investment Selection A B CEconomy declines 500 -2000 -7000No charge 1000 2000 -1000Economy Expand 2000 5000 20,000Based on his own past experience, the investor assigns the following probabilities to eacheconomic condition: P (Economy declines) = 0.30 P (No change) = 0.50 P (Economy expands) = 0.20 iv. Compute the expected opportunity loss (EOL) for each investment.v. Explain the meaning of the expected value of perfect information (EVPI) in this problem.vi. Based on the…
An insurance company issues a one-year $1,000 policy insuring against an occurrence A that historically happens to 7 out of every 100 owners of the policy. Administrative fees are $25 per policy and are not part of the company's "profit." How much should the company charge for the policy if it requires that the expected profit per policy be $80? [HINT: If C is the premium for the policy, the company's "profit" is C − 25 if A does not occur, and C − 25 − 1,000 if A does occur.]
Consider the following information: Income to the firm from workers who sell door-to-door Bad Luck Good Luck Low Effort (e = 0) $5,000 $7,000 High Effort (e = 1) $7,000 $13,000 Cost of effort: c = $2500e Probabilities: Bad luck = .75; Good luck = .25 Under which of the following payment schemes would workers have an incentive to exert high effort?
In a staff meeting called to address the problem of returned cheques at the supermarkets where you areinterning as a financial analyst, the bank reports that 12 percent of all cheques are returned for insufficientfunds, and of those, in those 50 percent of cases, there was cash given back to the customer. overall ,10percent of customers ask for cash back at the end of their transaction with the store. For 1,000 customervisits, how many transactions will involve: (f) insufficient funds?(g) Cash back to the customer?(h) Both insufficient funds and cashback?(i) Either insufficient funds or cash back?
A company is facing three types of decisions for the purchasing of a seasonal product. The protprojection may depend on the demand level. The payos for the situations are given in the followingtable:DemandDecision High (s1) Medium (s2) Low (s3)d1 60 60 50d2 80 80 30d3 100 70 101. If the prior probabilities are 0.3, 0.3, and 0.4, respectively, what is the recommended decision?Show all the calculations and answer with a decision tree.2. At each preseason sales meeting, the vice president of sales provides a personal opinion re-garding potential demand for the product. The prediction of the vice president have alwaysbeen either excellent (E) or very good (G). Posterior probabilities are as follows.P(V)=0.7; P(E)=0.3P(s1jE)=0.34; P(s1jV)=0.2P(s2jE)=0.32; P(s2jV)=0.26; 1 ) Suppose that the prior probability of low demand is always fixed to 0.4, give a sensitivityanalysis on the other probabilities and give different scenarios with a graphic.
Find the expected value of this investment scheme. Profit/Loss Amount Probability -$6200 0.08 -$150 0.66 $4500 0.02 $2000 0.24
Following is the payoff table for the Pittsburgh Development Corporation (PDC) Condominium Project. Amounts are in millions of dollars. State of Nature Decision Alternative Strong Demand S1 Weak Demand S2 Small complex, d1 9 8 Medium complex, d2 13 3 Large complex, d3 19 -9 Suppose PDC is optimistic about the potential for the luxury high-rise condominium complex and that this optimism leads to an initial subjective probability assessment of 0.8 that demand will be strong (S1) and a corresponding probability of 0.2 that demand will be weak (S2). Assume the decision alternative to build the large condominium complex was found to be optimal using the expected value approach. Also, a sensitivity analysis was conducted for the payoffs associated with this decision alternative. It was found that the large complex remained optimal as long as the payoff for the strong demand was greater than or equal to $16 million and as long as the payoff for the weak demand was greater…
Question12: In the given payments matrix, the earnings that a business can obtain with different distribution strategies (S1, S2, S3) are given. The probabilities of the natural states are respectively; P(Q1)=0.2, P(Q2)=0.4, P(Q3)=0.4. 1-) What is the expected payment when the information is not received? 2-) What is the expected payment when the information is received? 3-) What is the expected value of additional information?
Suppose we are interested in investing in one of three investment opportunities: d1, d2, or d3. The following profit payoff table shows the profits (in thousands of dollars) under each of the 3 possible economic conditions: s1, s2, and s3 Assume the states of nature have the following probabilities: P(s1) = 0.2, P(s2) = 0.3, P(s3) = 0.5. Which decision alternative is best?

SEE MORE QUESTIONS

Recommended textbooks for you

Advanced Engineering Mathematics

Advanced Math

ISBN:

9780470458365

Author:

Erwin Kreyszig

Publisher:

Wiley, John & Sons, Incorporated

Numerical Methods for Engineers

Advanced Math

ISBN:

9780073397924

Author:

Steven C. Chapra Dr., Raymond P. Canale

Publisher:

McGraw-Hill Education

Introductory Mathematics for Engineering Applicat…

Advanced Math

ISBN:

9781118141809

Author:

Nathan Klingbeil

Publisher:

WILEY

Advanced Engineering Mathematics

Advanced Math

ISBN:

9780470458365

Author:

Erwin Kreyszig

Publisher:

Wiley, John & Sons, Incorporated

Numerical Methods for Engineers

Advanced Math

ISBN:

9780073397924

Author:

Steven C. Chapra Dr., Raymond P. Canale

Publisher:

McGraw-Hill Education

Introductory Mathematics for Engineering Applicat…

Advanced Math

ISBN:

9781118141809

Author:

Nathan Klingbeil

Publisher:

WILEY

Mathematics For Machine Technology

Advanced Math

ISBN:

9781337798310

Author:

Peterson, John.

Publisher:

Cengage Learning,

Basic Technical Mathematics

Advanced Math

ISBN:

9780134437705

Author:

Washington

Publisher:

PEARSON

Topology

Advanced Math

ISBN:

9780134689517

Author:

Munkres, James R.

Publisher:

Pearson,

SEE MORE TEXTBOOKS