Calculating EVPI based on a decision tree
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I'm absolutely lost on how to figure out EVPI using a decision tree.
I've attached the decision trees for two items (labeled figure 12.11, 12.12) and I am trying to calculate expected value of perfect information for each tree. I don't know how to set this up manually and the PrecisionTool software for use with Excel that came with the book doesn't seem to be producing the correct results.
The book states EVPI for 12.11 is 1.2 but I'm not seeing how this was computed and I don't have any answer on 12.12.
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Solution Summary
This solution provides step by step calculations for finding EVPI using a decision tree.
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