Dollar Department Stores has received an offer from HarrisDiamonds to purchase Dollar's store on Market Street for $120,000.Dollar has determined probability estimates of the store's futureprofitability, based on economic outcomes, as: P($80,000) = 0.2,P($100,000) = 0.3, P($120,000) = 0.1, and P($140,000) = 0.4.
part a :
Not considering probabilities, based on each of the followingcriteria, should Dollar sell the store?
1 a. Optimistic approach (Maximax)
1 b. Conservative approach (Maximin)
Part B:
Now use the given probabilities and based on each of thefollowing criteria, should Dollar sell the store?
B 1. Expected Monetary Value (EMV)
B 2. Expected Opportunity Loss (EOL)
Part C:
Determine the Expected Value of Perfect Information (EVPI).
Part D:
A marketing firm has offered to forecast the market with 100%accuracy at a cost of $10,000. Should the offer be accepted? Why orwhy not.
Please go into depth and show formulas and how you got to thesolution.
