Question 5.s-7: Computing the Expected Value of Perfect Information Using Ex...

Using information from Examples 5S–2, 5S–3, and 5S–4, we can compute the expected regret for each alternative. Thus:
Small facility            .30(0) + .50(2) + .20(6) = 2.2
Medium facility        .30(3) + .50(0) + .20(4) = 1.7 [minimum]
Large facility             .30(14) + .50(10) + .20(0) = 9.2
The lowest expected regret is 1.7, which is associated with the second alternative. Hence, the EVPI is $1.7 million, which agrees with the previous example using the other approach.