# Find the expected value of the best decision

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 0.20, 0.30, and 0.50 respectively. What are the expected net revenues for the number of workers he will decide to hire? The following payoff table is given in thousands of dollars (e.g. 50 = \$50,000). Note: Please express your answer as a whole number in thousands of dollars (e.g. 50 = \$50,000). Round to the nearest whole number, if necessary.
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Question 38
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 0.20, 0.30, and 0.50 respectively. What is the expected value of perfect information? Do not include the dollar “\$” sign with your answer. The following payoff table is given in thousands of dollars (e.g. 50 = \$50,000). Note: Please express your answer as a whole number in thousands of dollars (e.g. 50 = \$50,000). Round to the nearest whole number, if necessary.
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Question 39
The following sales data are available for 2003-2008 :
Year Sales Forecast
2003 7 7
2004 8 8.5
2005 12 10.5
2006 14 13
2007 16 15
2008 18 16
Calculate the MAPD and express it in decimal notation. Please express the result as a number with 4 decimal places. If necessary, round your result accordingly. For instance, 9.14677, should be expressed as 9.1468

Question 40
Consider the following decision tree. The objective is to choose the best decision among the two available decisions A and B. Find the expected value of the best decision. Do not include the dollar “\$” sign with your answer.
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