Question

I
Q. 2.
A newspaper boy buys magazines for Rs. 13 each and sells them for Rs. 18 each.
He can not return the unsold magazine. The past record of sales is as follows:
Sales
23
24
25
26
27
28
29
30
Prob.
.05
.10
.15
.30
.20
.10
.05
.05
i) Prepare the opportunity loss table
ii) Select the optimal act using expected opportunity loss criterion.
iii) Find EVPI
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Answer 1

Answer:

The formula for EVPI is simply the sum of the maximum payoff for each state of nature and then subtracting the best possible expected value