A computer reseller needs to decide how many laptops to order next month. The lowest end laptop costs $220 and the retailer can sell these for $300. However, the laptop manufacturer already announced that they are coming out with a new model in a couple of months. Any laptops that will not be sold by the end of next month will have to be heavily discounted at half-price. The reseller also needs to consider that every time he fails to fulfill a laptop order, he stands to lose $25 for every unit. Based on the past months’ sales, the reseller estimates the demand probabilities for sales (S) as follows: P(0 units) = 0.3; P(1 units) = 0.4; P(2 units) = 0.2; P(3 units) =0.1. The reseller thinks it’s a good idea to conduct a survey on whether or not his customers are going to buy laptops and how many. The survey results will either be Yes (Y), No (N), or Don’t Know (DK). The probability estimates of the results based on the demand for the number of units are:
Question 9
A computer reseller needs to decide how many laptops to order next month. The lowest end laptop costs $220 and the retailer can sell these for $300. However, the laptop manufacturer already announced that they are coming out with a new model in a couple of months. Any laptops that will not be sold by the end of next month will have to be heavily discounted at half-price. The reseller also needs to consider that every time he fails to fulfill a laptop order, he stands to lose $25 for every unit. Based on the past months’ sales, the reseller estimates the demand probabilities for sales (S) as follows: P(0 units) = 0.3; P(1 units) = 0.4; P(2 units) = 0.2; P(3 units) =0.1.
The reseller thinks it’s a good idea to conduct a survey on whether or not his customers are going to buy laptops and how many. The survey results will either be Yes (Y), No (N), or Don’t Know (DK). The probability estimates of the results based on the demand for the number of units are:
P(Y|S = 0 units) = 0.1
P(Y|S = 1 units) = 0.2
P(Y|S = 2 units) = 0.3
P(Y|S = 3 units) = 0.9
P(N|S = 0 units) = 0.8
P(N|S = 1 units) = 0.3
P(N|S = 2 units) = 0.1
P(N|S = 3 units) = 0.1
Determine the reseller's best decision without conducting the survey?
Group of answer choices
Order 4 laptops.
Cannot be determined.
Order 1 laptop.
Order 3 laptops.
Order 2 laptops. – X (because The reseller would go with order 2 as it has highest EMV i.e. 55 than all other orders)
Do not order any laptops.
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