The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, moderate, or high, as follows.

What is his expected value of perfect information?
A) $15,000
B) $61,000
C) $69,000
D) $72,000
E) $87,000

Question

The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, moderate, or high, as follows.

What is his expected value of perfect information?

What is his expected value of perfect information?
A) $15,000 
B) $61,000 
C) $69,000 
D) $72,000 
E) $87,000

Quizplus · Accepted Answer

The Answer of The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, moderate, or high, as follows.

What is his expected value of perfect information?
A) $15,000 
B) $61,000 
C) $69,000 
D) $72,000 
E) $87,000

The Operations Manager for a Local Bus Company Wants to Decide