As discussed in previous answers, the purpose of creation is related to providing an opportunity for reward through free choice. This purpose is not affected by knowledge. Just as someone who knows the fate of students in a school still serves the purpose of establishing the school and enrolling students, without their knowledge affecting the reality of the situation. 

One might argue that with knowledge of the outcome, creating the world in such a manner becomes unnecessary. If God knows the outcome, why create the world at all? Why not begin the process of reward right away? 

This is incorrect, because the purpose of creation is based on trial and testing, where reward is deserved through actions themselves. Knowledge cannot substitute for action; we cannot reward students with success or failure without testing them, even if we already know the outcome. 

Therefore, trial is necessary to establish deservingness, to establish the proof, and to remove any excuses. As God says: {If you had agreed, you would have differed in the appointment, but God is to accomplish a matter that was decreed, to destroy the one who was to perish, by clear proof, and give life to the one who was to live, by clear proof. And indeed, God is Hearing and Knowing} [Q8:42]. Also, He says: {Messengers giving good tidings and warning, that people will have no argument against Allah after the messengers. And God is Mighty and Wise} [Q4:165]. And He says: {Say, ‘To God belongs the perfect argument. If He had willed, He would have guided you all’} [Q6:149]. 

Additionally, there might be a question regarding the justification for creating the disbeliever when their fate is to be in torment. This, however, falls outside the scope of this particular discussion and has been addressed in a previous question.

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[1] Refer to the answer to the question: “Why did God create humans?” And the answer to the question: What does reason dictate about the purpose of creation? 

[2] Refer to the answer to the question: What is the reason for creating the disbeliever?