Question

Melissa Rossi, Product Manager at National Consumers, Inc. (NCI), is evaluating alternatives for introducing a new package for toothpaste. She has identified four alternative markets, and has constructed the following table which shows NCI's rewards (in $1,000,000's) for various levels of acceptance by the markets and their probabilities.

Market Acceptance
Market Low (.3) Medium (.4) High (.3)
Northeast Only -0.7 0 1
Southeast Only -0.2 0.2 0.8
National -1.5 -0.2 2
None (don't introduce the new package) 0 0 0

The expected value of perfect information is ________.
a) $420,000
b) $570,000
c) $660,000
d) $720,000
e) $890,000

Answer

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