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Lakewood Fashions must decide how many lots of assorted ski wear to order for its three...

Lakewood Fashions must decide how many lots of assorted ski wear to order for its three stores. Information on pricing, sales, and inventory costs has led to the following payoff table, in thousands.

Low Demand Medium Demand High Demand
Order 1 Lot 12 15 15
Order 2 Lots 9 25 35
Order 3 Lots 6 35 60

a) How many lots would an optimist order?

b) Which decision would minimize the maximum regret?

c) Assume that the probabilities for low, medium and high demand are 0.2, 0.4, and 0.4, respectively. Which decision would maximize the expected payoff?

d) What is the expected value of perfect information?

Math   Statistics-And-Probability   
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