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# Quantitative Methods

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1. s1 s2 s3
d1 10 8 6
d2 14 15 2
d3 7 8 9

The probabilities of each state s1, s2, s3 are 0.2, 0.4 and 0.4 respectively.
What is the EVPI?

2. The quality control manager for ENTA Inc. must decide whether to accept (a1), further analyze (a2), or reject (a3) a lot of incoming material. Assume the following payoff table is available. Historical data indicates that there is a 30% chance that the lot is poor quality (s1), a 50 % chance that the lot is fair quality (s2), and a 20% chance that the lot is good quality (s3). s1 s2 s3 a1 20 30 90 a2 60 70 10 a3 80 50 40 What is the maximum amount that you would be willing to pay for perfect information? put your answer in the form x.x or x

#### Solution Preview

1. s1 s2 s3
d1 10 8 6
d2 14 15 2
d3 7 8 9
The probabilities of each state s1, s2, s3 are 0.2, 0.4 and 0.4 respectively.
What is the EVPI?