Chapter 20, Problem 18PS

a.

To determine

Determine the revised probability of the occurrence of events $E_1$ and $E_2$ .

b.

To determine

Find the expected monetary value of the action A and action B.

c.

To determine

Find the expected opportunity loss for action A and action B.

d.

To determine

Explain the meaning of the expected value of perfect information in the given problem.

e.

To determine

Choose the optimal action based on the sub-part (b) and (c) and explain the choice.

f.

To determine

Calculate the coefficient of variation for both action A and action B.

g.

To determine

Compute the return to risk ratio for action A and action B.

h.

To determine

Choose the optimal action based on the sub-parts (f) and (g).

i.

To determine

Compare the results obtained in the sub-parts e and g.