Question

A plant manager considers the operational cost per hour of five machine alternatives. The cost per hour is sensitive to three potential weather conditions: cold, mild, and warm. The following table represents the operations cost per hour for each alternative-state of nature combination:

Alternatives	States of Nature			EMV
	Weather related cost per hour
	Cold cost/day	Mild cost/day	Warm cost/day
Machine 1	$42	$40	$45
Machine 2	$45	$42	$47
Machine 3	$40	$35	$54
Machine 4	$60	$30	$48
Machine 5	$45	$40	$45
	0.3	0.5	0.2

Assume that for a randomly selected day, there is a 30% probability of cold weather, 50% probability of mild weather, and 20% probability of warm weather. What is the EVPI?

Answer 1