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ENTA inc. quality control

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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

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Solution Summary

The solution calculates the manager's decision to pay for perfect information to maintain quality control at ENTA inc.

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Calculate the expected payoff for the three alternative ...

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