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Consider a case where the management is facing with 3 options to choose from. The payoffs and probability associated with each of the scenario is also estimated and provided. Based on the information tabulated below, calculate the EVwPI (expected value with perfect information) and recommend what should be the maximum amount that the management should pay for the perfect information that can help them to make the best decision.

Decision alternative favourable market unfavourable market

Expensive system 10,000 -8,000

Les expensive system 8,000 - 4,000

No system 0 0

Probability 0.4 0.6

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92594049

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