Use the following payoff table to complete parts (a) through (j). The probability of event 1 is 0.30, theprobability of event 2 is 0.50, and the probability of event 3 is 0.20.a. Determine the optimal action based on the maximax criterion.Actionis the optimal action based on the maximax criterion because itsb. Determine the optimal action based on the maximin criterion.Actionis the optimal action based on the maximin criterion because itsc. Compute the expected monetary value (EMV) for each action.EMV(A) = $EMV(B) = $EMV(C) = $(Simplify your answare )ACTIONEVENT Buy 100, A ($) Buy 200, B ($) Buy 500, C ($)Demand 100, 1 500300- 300Demand 200, 21,000Demand 500, 34005005001,0002,500payoff is thepayoff is theof all the actions.of all the actions. Use the following payoff table to complete parts (a) through (j). The probability of event 1 is 0.30, theprobability of event 2 is 0.50, and the probability of event 3 is 0.20.EOL(A) = $EOL(B) = $EOL(C) = $(Simplify your answers.)ACTIONEVENT Buy 100, A ($) Buy 200, B ($) Buy 500, C ($)- 3005005003001,0004005001,0002,500Demand 100, 1Demand 200, 2Demand 500, 3e. Explain the meaning of the expected value of perfect information (EVPI) in this problem. Choose the correct answer below.A. The EVPI value provides a guideline for an upper bound on how much to consider paying for better information.O B. The EVPI is the expected payoff that the company will receive with perfect information.C. The EVPI is the value that the company should expect to pay for perfect information.O D. The EVPI value provides a guideline for a lower bound on how much to consider paying for better information.

Decision-making is influenced by an organization as per the degree of certainty involved in this. In…

Answered: Use the following payoff table to…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.4: The Precision Tree Add-in

Problem 9P

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