The quality control manager for ENTA Inc. should decide whether to accept (a1), further analyze (a2), or reject (a3) a lot of incoming material. Suppose the following payoff table is available. Historical data points out that there is a 20% chance that the lot is poor quality (s1), a 50% chance that the lot is fair quality (s2), and 30% chance that the lot is good quality (s3)
| |
S1 |
s2 |
s3 |
| A1 |
20 |
30 |
90 |
| A2 |
60 |
70 |
10 |
| |
80 |
50 |
40 |
a. Compute the expected value for each of three actions and find out if the manager must accept, further examine, or reject the lot?
Expected values a1=________ a2=__________ a3=___________
b. Find out the expected value of perfect information (EVPI)? EVPI=_________