The Friendlys are considering hiring a petroleum analyst to determine the future availability of gasoline. The analyst will report that either a shortage or a surplus will occur.

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The probability that the analyst will indicate a shortage given that a shortage actually occurs is .90 and shortage given surplus is .30. The probability that the analyst will indicate a surplus given that a surplus actually occurs is .70 and surplus given shortage is .

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10 1 Set up probability revision tables – one for a report of a shortage and one for a report of a surplus. 2 Carry out posterior analysis of Friendlys decision problem. That is assuming the forecast is shortage recalculate the EMVs for compact cars, full-sized cars and trucks and determine the choice that should be made. Assuming the forecast is surplus recalculate the EMVs for compact cars, full-sized cars and trucks and determine the choice that should be made.

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