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# Question 6 Consider the following payoff table that represents the...

Question 6

Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1        S2        S3

A        \$60      \$145    \$120       B            \$75      \$125   \$110

C        \$95      \$85      \$130

Refer to the payoff table. Using the maximin criterion, what would be the highest expected payoff?

a.\$85

b.\$75

c.\$145

d.\$125

Question 7

Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1        S2        S3

A        \$60      \$145    \$120       B            \$75      \$125   \$110

C        \$95      \$85      \$130

Refer to the payoff table. Using the Laplace criterion, what would be the highest expected payoff?

a.\$108.30

b.\$103.30

c.\$125

d.\$120

Question 8

Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1        S2        S3

A        \$60      \$145    \$120       B            \$75      \$125   \$110

C        \$95      \$85      \$130

Refer to the payoff table. What is the expected value of perfect information (EVPI)? Assume P(S1) = 0.5 and P(S2) = 0.25.

a.\$11.25

b.\$20

c.\$0

d.\$15

Question 12

The ABC Corporation is considering introducing a new product, which will require buying new equipment for a monthly payment of \$5,000. Each unit produced can be sold for \$20.00. ABC incurs a variable cost of \$10.00 per unit. Suppose that ABC would like to realize a monthly profit of \$50,000. How many units must they sell each month to realize this profit?

a.500 units

b.5000 units

c.4500 units

d.450 units

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