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In the Following Profit Table, Di Represents Decision Variables and Si

Question 33

Short Answer

In the following profit table, di represents decision variables and Si represents states of nature.
S1 S2 S3 S4d115.0015.0015.0015.00 d210.005.0025.0025.00 d335.00040.0060.00 d460.0020.0050.0090.00\begin{array}{c|cccc}& \mathrm{S}_{1} & \mathrm{~S}_{2} & \mathrm{~S}_{3} & \mathrm{~S}_{4} \\\hline\mathrm{d}_{1} & 15.00 & 15.00 & 15.00 & 15.00 \\\mathrm{~d}_{2} & 10.00 & 5.00 & 25.00 & 25.00 \\\mathrm{~d}_{3} & 35.00 & 0 & 40.00 & 60.00 \\\mathrm{~d}_{4} & 60.00 & 20.00 & 50.00 & 90.00\end{array}
a. If management assigns probabilities as follows: S1 = 0.15; S2 = 0.25; S3 = 0.40; and S4 = 0.20, determine the expected value for d2.
b. Determine the expected value for d3.
c. Assuming the largest expected value for a decision variable is 24.00; determine the value of perfect information.

Correct Answer:

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a. 17.75
b...

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