The given payoff table gives profits based on several possible decision alternatives and different levels of demand.
State of Nature
Demand
Alternatives Low Medium High
Altv 1 80 120 140
Altv 2 90 90 90
Altv 3 50 70 150
Probability of the low demand is 0.4, where as probability of the medium and high demand is each 0.3.
i) What decision would the optimist make?
ii) What decision would the pessimist make?
iii) Find highest possible expected monetary value?
iv) Compute expected value of perfect information for given case.