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Decision analysis: Should IRS hire 1, 2or3 temporary workers

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6. The local operations manager for the IRS must decide whether to hire 1, 2, or 3 temporary workers. He estimates that net revenues will vary with how well taxpayers comply with the new tax code. The probabilities of low, medium and high compliance are 0.3, 0.4, and 0.3, respectively, and the payoff table is shown below. Using expected values, determine how many workers the company should hire.

# of workers Low compliance Medium compliance High compliance
1 50 50 50
2 20 60 100
3 -10 70 150

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Expected revenue if 1 worker is hired = 50 * 0.3 + 50 * 0.4 + 50 * 0.3 = ...

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