Use This Information to Answer the Following Questions

question 28

Essay

Use this information to answer the following questions.
A bakery must decide how many pies to prepare for the upcoming weekend.The bakery has the option to make 50,100,or 150 pies.Assume that demand for the pies can be 50,100,or 150.Each pie costs $5 to make and sells for $7.Unsold pies are donated to a nearby charity center.Assume that there is no opportunity cost for lost sales.
-Refer to the information above.Assume that the bakery (see problem 7)has obtained the following probability information regarding demand for the pies: P(50)= 0.3,P(100)= 0.5,and P(150)= 0.2.
a.Which alternative should be chosen using the expected monetary value (EMV)criterion?
b.What is the expected value under certainty?
c.What is the expected value under perfect information (EVPI)?

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Definitions:

Little

A term indicating a small size, amount, or degree of something.

Posttest

An examination or evaluation conducted after a course of study or period of training to assess what has been learned.

Instruction

The act of teaching or educating, often involving a direction or order that is to be followed.

Through

Moving in one side and out of the other side of (an opening, channel, or location), indicating motion from one end or side to the other.