Exercise 15:- Each unit of a product produced and sold earns a profit of Rs. 50 and unsold units result into a loss of Rs. 30. The probability distribution is given below : Units Demanded : 0 1 2. 3. Probability : 0.2. 0.2. 0.25. 0.3 Calculate EPPI and EVPI.

Exercise 15:- Each unit of a product produced and sold earns a profit of Rs. 50 and unsold units result into a loss of Rs. 30. The probability distribution is given below : Units Demanded : 0 1 2. 3. Probability : 0.2. 0.2. 0.25. 0.3 Calculate EPPI and EVPI.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Exercise 15:- Each unit of a product produced and sold earns a profit of Rs. 50 and unsold units result into a loss of Rs. 30. The probability distribution is given below :
Units Demanded : 0 1 2. 3.
Probability : 0.2. 0.2. 0.25. 0.3
Calculate EPPI and EVPI.

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Step 2: Calculate the Expected Profit per unit (EPPI):

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Step 3: Calculate the Expected Value of Perfect Information (EVPI):

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