Payoff Table Alternatives State 1 Opportunity Loss Table Alternatives State 1 State 2 State 2 Store

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Payoff Table Alternatives State 1 Opportunity Loss Table Alternatives State 1 State 2 State 2 Store size 1 200 175 Store size Payoff Table Alternatives State 1 Opportunity Loss Table Alternatives State 1 State 2 State 2 Store size 1 200 175 Store size 1 150 Store size 2 185 Store size 2 Store size 3 140 200 Store size 3 Store size 4 50 300 Store size 4 Given the information above, a. What is the alternative chosen using the optimistic (maximax) approach? Explain. b. What is the alternative chosen using the conservative (maximin) approach? Explain. C. What is the alternative chosen using the minimax regret criterion? Explain. Over the past 40 years, the probability of high demand is .3. Given this information, d. Calculate the expected monetary value (EMV) for each store size. Which store size would an EMV maximizer choose? e. Calculate the EVPI (that is, how much you should be willing to pay an economist (or a psychic) to tell you, with certainty, next year's state of nature).

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