The Operations Manager for a Local Bus Company Wants to Decide

question 98

Multiple Choice

The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, medium, or high, as follows: If he feels the chances of low, medium, and high demand are 30 percent, 30 percent, and 40 percent respectively, what is his expected value of perfect information?

• A) $15,000
• B) $61,000
• C) $69,000
• D) $72,000
• E) $87,000

---

Definitions:

Function

In mathematics and computer science, it refers to a relation or expression involving one or more inputs and a single output.

Folk

Relating to the traditional art, music, lore, and practices of a community or culture.

Propositional

Pertaining to or involving propositions, which are statements or expressions in logic that can be either true or false.

Prototype Theory

A model of categorization in cognitive science where some members of a category are more central or "prototypical" than others.