During the summer, Olympic swimmer Adam Johnsonswims every day. On sunny summer days, he goes to anoutdoor pool, where he may swim for no charge. On rainydays, he must go to a domed pool. At the beginning of thesummer, he has the option of purchasing a $15 season passto the domed pool, which allows him use for the entiresummer. If he doesn’t buy the season pass, he must pay $1each time he goes there. Past meteorological records indicatethat there is a 60% chance that the summer will be sunny(in which case there is an average of 6 rainy days during thesummer) and a 40% chance the summer will be rainy (anaverage of 30 rainy days during the summer).Before the summer begins, Adam has the option ofpurchasing a long-range weather forecast for $1. Theforecast predicts a sunny summer 80% of the time and arainy summer 20% of the time. If the forecast predicts asunny summer, there is a 70% chance that the summer willactually be sunny. If the forecast predicts a rainy summer,there is an 80% chance that the summer will actually berainy. Assuming that Adam’s goal is to minimize his totalexpected cost for the summer, what should he do? Also findEVSI and EVPI.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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During the summer, Olympic swimmer Adam Johnson
swims every day. On sunny summer days, he goes to an
outdoor pool, where he may swim for no charge. On rainy
days, he must go to a domed pool. At the beginning of the
summer, he has the option of purchasing a $15 season pass
to the domed pool, which allows him use for the entire
summer. If he doesn’t buy the season pass, he must pay $1
each time he goes there. Past meteorological records indicate
that there is a 60% chance that the summer will be sunny
(in which case there is an average of 6 rainy days during the
summer) and a 40% chance the summer will be rainy (an
average of 30 rainy days during the summer).
Before the summer begins, Adam has the option of
purchasing a long-range weather forecast for $1. The
forecast predicts a sunny summer 80% of the time and a
rainy summer 20% of the time. If the forecast predicts a
sunny summer, there is a 70% chance that the summer will
actually be sunny. If the forecast predicts a rainy summer,
there is an 80% chance that the summer will actually be
rainy. Assuming that Adam’s goal is to minimize his total
expected cost for the summer, what should he do? Also find
EVSI and EVPI.

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