Rose Par posted Apr 5, 2025 9:01 PM Subscribe To: Store Owner From: Rose Par, Manager Subject: Decision About Selling Custom Flower Bouquets Date: April 5, 2025 Our shop, which prides itself on selling handmade gifts and cultural items, has recently received inquiries from customers about the availability of fresh flower bouquets for special occasions. This has prompted me to consider whether we should introduce custom flower bouquets in our shop. We need to decide whether to start offering this new product. There are three options: provide a complete selection of custom bouquets for events like birthdays and anniversaries, start small with just a few ready-made flower arrangements, or do not add flowers. There are also three possible outcomes. First, we might see high demand, and the bouquets could sell quickly. Second, we might have medium demand, with a few sold each week. Third, there might be low demand, and the flowers may not sell well, possibly going to waste. These outcomes depend on customer interest, pricing, and how fresh the flowers stay. When considering possible profits or losses, we have meticulously weighed the cost of buying fresh flowers, their shelf life, the space in the store for display, and the potential pricing. Because fresh flowers can spoil quickly, I decided to use the pessimistic decision strategy. This strategy helps us plan for the worst-case outcome so we don't take too much risk, ensuring the shop's financial security. Looking at the worst-case results, offering a complete bouquet service could lead to a loss of about $200 if the flowers don't sell. Selling a few ready-made arrangements might lead to a slight loss of about $40. Doing nothing means we have no gain or loss. So, the best option based on this strategy is to start small by offering a few flower bouquets and seeing how customers respond. In conclusion, testing the idea with several flower bouquets is innovative and safe. If customers like them, we can grow the selection over time. This lets us explore a new opportunity while protecting the shop from significant losses. I propose that we make a decision on this matter within the next two weeks to ensure we can plan and prepare accordingly. Sincerely. Rose PEER REPLY 1: Choose a classmate's Main Post and review their decision making process. 1. Choose a risk level for each of the states of nature (assign a probability value to each). 2. Explain why each risk level is chosen. 3. Which alternative do you believe would be the best based on the maximum EMV? 4. Do you feel determining the expected value with perfect information (EVWPI) is worthwhile in this situation? Why or why not?