A plant manager considers the operational cost per hour of five machine alternatives. The cost per hour is sensitive to three potential weather conditions: cold, mild, and warm. The following table represents the operations cost per hour for each alternative- state of nature combination: States of Nature Weather related cost per hour Alternatives Cold cost/day Mild cost/day Warm cost/day 28 38 36 42 33 39 Machine 1 Machine 2 Machine 3 32 39 38 Machine 4 29 33 34 37 40 38 Machine 5 Assume that for a randomly selected day, there is a 35% probability of cold weather, 45% probability of mild weather, and 20% probability of warm weather. What is the EVPI?
A plant manager considers the operational cost per hour of five machine alternatives. The cost per hour is sensitive to three potential weather conditions: cold, mild, and warm. The following table represents the operations cost per hour for each alternative- state of nature combination: States of Nature Weather related cost per hour Alternatives Cold cost/day Mild cost/day Warm cost/day 28 38 36 42 33 39 Machine 1 Machine 2 Machine 3 32 39 38 Machine 4 29 33 34 37 40 38 Machine 5 Assume that for a randomly selected day, there is a 35% probability of cold weather, 45% probability of mild weather, and 20% probability of warm weather. What is the EVPI?
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![A plant manager considers the operational cost per hour of five machine alternatives.
The cost per hour is sensitive to three potential weather conditions: cold, mild, and
warm. The following table represents the operations cost per hour for each alternative-
state of nature combination:
States of Nature
Weather related cost per hour
Alternatives Cold cost/day Mild cost/day Warm cost/day
Machine 1
28 38 36
Machine 2
42 33 39
Machine 3
32 39 38
Machine 4
29 33 34
Machine 5
37 40 38
Assume that for a randomly selected day, there is a 35% probability of cold weather,
45% probability of mild weather, and 20% probability of warm weather. What is the
EVPI?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4811ca48-3353-43f2-8d73-93f2140a6978%2F77ef9349-cb30-4f46-93a2-ce4c9e2be283%2Fcdd1448_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A plant manager considers the operational cost per hour of five machine alternatives.
The cost per hour is sensitive to three potential weather conditions: cold, mild, and
warm. The following table represents the operations cost per hour for each alternative-
state of nature combination:
States of Nature
Weather related cost per hour
Alternatives Cold cost/day Mild cost/day Warm cost/day
Machine 1
28 38 36
Machine 2
42 33 39
Machine 3
32 39 38
Machine 4
29 33 34
Machine 5
37 40 38
Assume that for a randomly selected day, there is a 35% probability of cold weather,
45% probability of mild weather, and 20% probability of warm weather. What is the
EVPI?
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