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Hi,
Q19 Sec B
For this question they asked the cost getting the perfect information
so calculating the perfect expected result we have to use the biggest outcomes
so we have to choose the biggest outcome of supplies
so expected value with perfect information= (1170*prob +1612*prob+2015*prob+2496*prob)
Here how to select which probability % to use for each maximum result,
Thanks
Expected value with perfect information = (0·15 x $1,170) + (0·30 x $1,612) + (0·40 x $2,015) + (0·15 x $2,496) = $1,839·50 you are right you then compare this with the expected value without perfect information which would be the highest of the expected values for the supply levels = $1,648·25 (at a supply level of 775 lunches).
(0.15 * 810) + (0.30 * 1395) + (0.55 * 2015) – This is the Maximum contribution.The value of perfect information is the difference between the expected value with perfect information and the expected value without perfect information = $1,839·50 – $1,648·25 = $191·25, therefore $191 to nearest whole $.
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