ActionsEventsE1E2E3E4A18-106.A2-41218-2АЗ148Find the best action under each of the 5 decision criteria.a. Expected Monetary Valueb. Expected Opportunity Lossс. Маximaxd. Maximine. Minimax Regret Rule1. 2. Zahra and Adrian and run a small Stationery shop called "A to Z Stationery". They mustorder copies for the coming week. Orders for the copies must be placed in quantities of 20.They can order 20, 40, 60 or 80 copies. The cost per copy is &70 and the copies will besold for 6100 each. Any copy left over at the end of the week can be sold (for certain) at645 each. If Zahra and Adrian run out of copies during the season, then they will suffer aloss of "goodwill" among their customers. They estimate this goodwill loss to be 5 percustomer who was unable to buy a copy. Zahra and Adrian estimate that the demand forcopies the coming week will be 10, 30, 50, or 70 copies with probabilities of 0.2, 0.4, 0.3,and 0.1 respectively.

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Actions Events ΕΙ E2 E3 E4 ΑΙ 8 0 -10 6 A2 -4 12 18 -2 A3 14 6 0 8 Find the best action under each of the 5 decision criteria. a. Expected Monetary Value b. Expected Opportunity Loss c. Maximax d. Maximin e. Minimax Regret Rule

Actions Events ΕΙ E2 E3 E4 ΑΙ 8 0 -10 6 A2 -4 12 18 -2 A3 14 6 0 8 Find the best action under each of the 5 decision criteria. a. Expected Monetary Value b. Expected Opportunity Loss c. Maximax d. Maximin e. Minimax Regret Rule

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Actions
Events
E1
E2
E3
E4
A1
8
-10
6.
A2
-4
12
18
-2
АЗ
14
8
Find the best action under each of the 5 decision criteria.
a. Expected Monetary Value
b. Expected Opportunity Loss
с. Маximax
d. Maximin
e. Minimax Regret Rule
1.

2. Zahra and Adrian and run a small Stationery shop called "A to Z Stationery". They must
order copies for the coming week. Orders for the copies must be placed in quantities of 20.
They can order 20, 40, 60 or 80 copies. The cost per copy is &70 and the copies will be
sold for 6100 each. Any copy left over at the end of the week can be sold (for certain) at
645 each. If Zahra and Adrian run out of copies during the season, then they will suffer a
loss of "goodwill" among their customers. They estimate this goodwill loss to be 5 per
customer who was unable to buy a copy. Zahra and Adrian estimate that the demand for
copies the coming week will be 10, 30, 50, or 70 copies with probabilities of 0.2, 0.4, 0.3,
and 0.1 respectively.

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Step 1: Define decision theory

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Step 2: Calculate Expected Monetary Value (EMV)

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Step 3: Calculate Expected Opportunity Loss (EOL)

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Step 4: Calculate Maximax

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Step 5: Calculate Maximin

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Step 6: Apply Minimax Regret Rule

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