Dillon DeMarco is considering opening a small Italian bakery in the nearby mall, close to the Italian section of the city. He has chosen a good location where he believes there will be interest in the bakery. However, Dillon is unsure how much interest there will be and is trying to decide whether to open a small, medium or large shop. It really depends on what the economy is like in the next year whether people are able to spend their money on his Italian delicacies. Based on the latest financial reports, there is a 20% probability for a strong economy, 50 % probability for an average economy and 30 % probability for a bad economy. The potential payoffs for a small, medium or large shop for a given year are shown in the decision table. Alternatives Small Shop Medium Shop Large Shop Probabilities Answer Calculate the Expected Monetary Values (EMV) for each alternative. Strong Economy 25,000 50,000 75,000 0.20 Decision Table EMV (small shop) = $ EMV (medium shop) = $ (me EMV large shop = State of Nature Average Economy 16,000 50,000 62,000 0.50 Bad Economy 30,000 45,000 55,500 0.30 Keypad Keyboard Shortcuts Tables

Dillon DeMarco is considering opening a small Italian bakery in the nearby mall, close to the Italian section of the city. He has chosen a good location where he believes there will be interest in the bakery. However, Dillon is unsure how much interest there will be and is trying to decide whether to open a small, medium or large shop. It really depends on what the economy is like in the next year whether people are able to spend their money on his Italian delicacies. Based on the latest financial reports, there is a 20% probability for a strong economy, 50 % probability for an average economy and 30 % probability for a bad economy. The potential payoffs for a small, medium or large shop for a given year are shown in the decision table. Alternatives Small Shop Medium Shop Large Shop Probabilities Answer Calculate the Expected Monetary Values (EMV) for each alternative. Strong Economy 25,000 50,000 75,000 0.20 Decision Table EMV (small shop) = $ EMV (medium shop) = $ (me EMV large shop = State of Nature Average Economy 16,000 50,000 62,000 0.50 Bad Economy 30,000 45,000 55,500 0.30 Keypad Keyboard Shortcuts Tables

College Algebra (MindTap Course List)

12th Edition

ISBN:9781305652231

Author:R. David Gustafson, Jeff Hughes

Publisher:R. David Gustafson, Jeff Hughes

Chapter6: Linear Systems

Section6.8: Linear Programming

Problem 5SC: If during the following year it is predicted that each comedy skit will generate 30 thousand and...

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Dillon DeMarco is considering opening a small Italian bakery in the nearby mall, close to the Italian section of the city. He has chosen a good location where he believes
there will be interest in the bakery. However, Dillon is unsure how much interest there will be and is trying to decide whether to open a small, medium or large shop. It
really depends on what the economy is like in the next year whether people are able to spend their money on his Italian delicacies. Based on the latest financial reports,
there is a 20% probability for a strong economy, 50 % probability for an average economy and 30% probability for a bad economy. The potential payoffs for a small,
medium or large shop for a given year are shown in the decision table.
Alternatives
Small Shop
Medium Shop
Large Shop
Probabilities
Answer
Calculate the Expected Monetary Values (EMV) for each alternative.
EMV
Decision Table
Strong Economy
25,000
50,000
75,000
0.20
EMV
(small shop) = $
EMV (medium shop) = $
(large shop) = $
State of Nature
Average Economy
16,000
50,000
62,000
0.50
Bad Economy
30,000
45,000
55,500
0.30
Tables
Keypad
Keyboard Shortcuts

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