Leo Fattel, a toy manufacturer, has three different mechanisms that can be installed in a doll that it sells. The different mechanisms have three different setup costs (overheads) and variable costs and, therefore, the profit from the dolls is dependent on the volume of sales. The anticipated payoffs are as follows. The anticipated payoffs are as follows. What is the expected value of perfect information? Light Demand Moderate Demand Heavy Demand Probability 0.25 0.45 0.3 Wind-up action $325,000 $190,000 $170,000 Pneumatic action $300,000 $420,000 $400,000 Electrical action -$400,000 $240,000 $800,000 Group of answer choices
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Leo Fattel, a toy manufacturer, has three different mechanisms that can be installed in a doll that it sells. The different mechanisms have three different setup costs (overheads) and variable costs and, therefore, the profit from the dolls is dependent on the volume of sales. The anticipated payoffs are as follows. The anticipated payoffs are as follows. What is the expected value of perfect information?
|
Light Demand |
Moderate Demand |
Heavy Demand |
|
|
Probability |
0.25 |
0.45 |
0.3 |
|
Wind-up action |
$325,000 |
$190,000 |
$170,000 |
|
Pneumatic action |
$300,000 |
$420,000 |
$400,000 |
|
Electrical action |
-$400,000 |
$240,000 |
$800,000 |
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