Suppose a grocer is faced with a problem of how many cases of milk to stock to meet this week’s demand. The grocer estimates that 10, 15, 20, or 25 cases will be needed and wants to analyze the situation using a payoff table and decision theory to determine how many cases to stock. Every case of milk costs the grocer $55 and will be sold for $90 (if sold during the week). If there are cases left at the end of the week, they will be sold to a food bank for $30 per case. Fill in the payoff table (Using Excel - calculate the payoff for each combination of cases of milk ordered and cases of milk demanded). Cases demanded 10152025 Cases stocked10 15 20 25 B. Assume the probability of demand is determined as in the table below. Demand10 cases15 cases20 cases25 casesProbability.08.25.45.22 Calculate the Expected monetary value for each alternativeC. Based on the EMV results, how many cases should the grocer stock?

Cost Price = $55 Selling Price = $90 Salvage value = $30

Answered: Suppose a grocer is faced with a…

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Suppose a grocer is faced with a problem of how many cases of milk to stock to meet this week’s demand. The grocer estimates that 10, 15, 20, or 25 cases will be needed and wants to analyze the situation using a payoff table and decision theory to determine how many cases to stock. Every case of milk costs the grocer $55 and will be sold for $90 (if sold during the week).

If there are cases left at the end of the week, they will be sold to a food bank for $30 per case.