The director of social services of a county has learned that the
state has mandated additional information requirements. This will
place an additional burden on the agency. The director has
identified three acceptable alternatives to handle the increased
workload. One alternative is to reassign present staff members, the
second is to hire and train two new workers, and the third is to
redesign current practice so that workers can readily collect the
information with little additional effort. An unknown factor is the
caseload for the coming year when the new data will be collected on
a trial basis. The estimated costs for various options and
caseloads are shown in the following table:
CASELOAD | |||||
Moderate | High | Very High | |||
Reassign staff | $ | 50 | * | 70 | 60 |
New staff | 70 | 70 | 70 | ||
Redesign collection | 85 | 90 | 95 | ||
*Cost in $ thousands.
After contemplating the caseload question, the director of social
services has decided that reasonable caseload probabilities are
0.20 for moderate, 0.30 for high, and 0.50 for very high.
a. Which alternative will yield the minimum
expected cost?
New Staff
Reassign
Redesign
c. Determine the expected value of perfect
information using an opportunity loss table. (Round your
answers to the nearest whole number. Leave no cells blank - be
certain to enter "0" wherever required.)
Opportunity loss table | |||||
Moderate($) | High($) | Very High($) | EOL($) | ||
Reassign | |||||
New Staff | |||||
Redesign | |||||
(0.20) | (0.30) | (0.50) | |||
Expected value of perfect information
$
Using treeplan plugin for excel ,we draw the decision tree as below.
a.The alternative with minimum expected cost is Reassign staff and the expected cost is $ 61 thousands
b.
Expected value of perfect information =Expected value with perfect information-Expected value without perfect information
=0.2 *50 +0.3 *70+0.5*60 -EVwoPI
=10+21+30-EVwoPI
=61-EVwoPI
=61-EVwoPI
But from the decision tree,we have EVwoPI=61
So EV of perfect information=61-61=0
EV of perfect information=0
The director of social services of a county has learned that the state has mandated additional...
Problem 5S-14 The director of social services of a county has learned that the state has mandated additional information requirements. This will place an additional burden on the agency. The director has identified three acceptable alternatives to handle the increased workload. One alternative is to reassign present staff members, the second is to hire and train two new workers, and the third is to redesign current practice so that workers can readily collect the information with little additional effort. An...
Question 1 The director of social services of a county has learned that the state has mandated additional information requirements. This will place and additional burden on the agency. The director has identified three acceptable alternatives to handle the increased workload. One alternative is to reassign present staff members, the second is to hire and train two new workers, and the third is to redesign current practice so that workers can readily collect the information with little additional etfort. An...
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