Question

3.6 Due to shortages of child abuse clinics, many children in underserved areas are left without access to much-needed comprehensive services. In partnership with local advocacy groups, the Preserve Health System is working to provide this crucial community service to its service area. Under the leadership of the health system's chief operating officer, a cross-functional project team has been created to identify an ideal site for opening a new child abuse clinic in the region. Data on potential revenues at various case volumes at each possible site are shown in Table EX 3.6.

Payoff: revenue for case volume

Volume	Site1	site 2	site 3	site 4
<250	117,450	95,489	94,002	111,356
250-500	115,391	92,286	90,800	105,351
501-800	119,509	98,692	97,205	117,361
801-1,000	113,332	89,198	87,597	99,289
>1000	121,568	101,780	100,407	123,423

a. Assuming the chief operating officer is a pessimist, which site would be selected?

b. If many of the local advocacy groups are optimists, which site location would they select?

c. Under a Laplace strategy, which site would be selected?

d. The project team has conducted a feasibility study to estimate the probability of case volumes at each site. Given the probabilities in Table EX 3.6.1, what is the EMV solution to this problem?

	Probabilities for Case Volume by Site
Volume	Site 1	Site 2	Site 3	Site 4
<250	0.40	0.50	0.60	0.60
250–500	0.15	0.15	0.15	0.125
501–800	0.15	0.15	0.15	0.125
801–1,000	0.15	0.10	0.05	0.075
>1,000	0.15	0.10	0.05	0.075

Answer 1

a. b. c. d

All the calculation has been done in the excel. Please find excel result screenshot and formula to obtain the result

Formula