MATH 318, Chapter 4 and 5 Quiz

You may use a calculator on this quiz. You may not use a cell phone or computer. If you wish partial credit for incorrect answers, please show your work carefully and give justifications for your answers. If you find that you are spending a lot of time on one problem, leave it blank and move on to the next. There are questions on both sides of this quiz paper.
The questions in this quiz are based on Chapter 4, problem 24.
Rona and Jerry carpool to work. The following payoff table shows time in minutes for traveling to their workplace on two different routes. Depending on expressway traffic, times may be different from day to day.
 No TrafficTraffic
Queen Ave.3035
  1. (15 pts) In deciding which route to take, what is the chance event?




  2. (15 pts) What decision is recommended by the conservative strategy? Why?





  3. (20 pts) If the probability of traffic is 25%, what decision is recommended by the expected value approach? Show your work.







  4. (20 pts) Draw a decision tree describing this situation.









  5. (15 pts) Compute the expected value of perfect information (EVPI). Show your work.





  6. (15 pts) Rona assigns the following utilities to driving times. What decision does the expected utility approach recommend for Rona?





Bonus (5 pts) Create a risk profile or two to help Jerry and Rona decide on a route.