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(Using the same problem) A vendor for the local ballpark food stand is questioning whether to stock his concession with a large or small inventory. He believes that it will depend upon the size of the crowd. He has developed a payoff matrix for the various alternatives (stocking decision) and states of nature (size of crowd). What is the answer using the criterion of minimax regret? Alternatives Large Inventory Small Inventory Probability OA)-$2,000 OB) $130,000 O C) SO OD) $20,000 O E) $153,400 Large Crowd $220,000 $90,000 .20 PROFIT (S) Average Crowd $50,000 $70,000 .50 Small Crowd -$2,000 -$5,000 .30

(Using the same problem) A vendor for the local ballpark food stand is questioning whether to stock his concession with a large or small inventory. He believes that it will depend upon the size of the crowd. He has developed a payoff matrix for the various alternatives (stocking decision) and states of nature (size of crowd). What is the answer using the criterion of minimax regret? Alternatives Large Inventory Small Inventory Probability OA)-$2,000 OB) $130,000 O C) SO OD) $20,000 O E) $153,400 Large Crowd $220,000 $90,000 .20 PROFIT (S) Average Crowd $50,000 $70,000 .50 Small Crowd -$2,000 -$5,000 .30

Practical Management Science
Practical Management Science
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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**Question 1** (Using the same problem) A vendor for the local ballpark food stand is questioning whether to stock his concession with a large or small inventory. He believes that it will depend upon the size of the crowd. He has developed a payoff matrix for the various alternatives (stocking decision) and states of nature (size of crowd). What is the answer using the criterion of minimax regret? | | **PROFIT ($)** | |---------------|-----------------| | | **Large Crowd** | **Average Crowd** | **Small Crowd** | | **Alternatives** | | | | | **Large Inventory** | $220,000 | $50,000 | -$2,000 | | **Small Inventory** | $90,000 | $70,000 | -$5,000 | | **Probability** | 0.20 | 0.50 | 0.30 | Options: - A) -$2,000 - B) $130,000 - C) $0 - D) $20,000 - E) $153,400 In this question, the vendor is analyzing the potential profit from stocking different inventory levels depending on crowd sizes. He uses the minimax regret criterion to make a decision. The table details potential profits based on different crowd scenarios (large, average, small) and inventory strategies (large or small). The probabilities for each crowd size are also provided.
Transcribed Image Text:**Question 1** (Using the same problem) A vendor for the local ballpark food stand is questioning whether to stock his concession with a large or small inventory. He believes that it will depend upon the size of the crowd. He has developed a payoff matrix for the various alternatives (stocking decision) and states of nature (size of crowd). What is the answer using the criterion of minimax regret? | | **PROFIT ($)** | |---------------|-----------------| | | **Large Crowd** | **Average Crowd** | **Small Crowd** | | **Alternatives** | | | | | **Large Inventory** | $220,000 | $50,000 | -$2,000 | | **Small Inventory** | $90,000 | $70,000 | -$5,000 | | **Probability** | 0.20 | 0.50 | 0.30 | Options: - A) -$2,000 - B) $130,000 - C) $0 - D) $20,000 - E) $153,400 In this question, the vendor is analyzing the potential profit from stocking different inventory levels depending on crowd sizes. He uses the minimax regret criterion to make a decision. The table details potential profits based on different crowd scenarios (large, average, small) and inventory strategies (large or small). The probabilities for each crowd size are also provided.
Expert Solution
Step 1: Introduction to decision-making:-

Mathematic models of decision-making help businesses make the correct decisions for their operational activities. These decision-making models provide a deep analysis of the data and bring out the most accurate decisions for the business. All decisions taken by using these models are beneficial for the business as all alternatives are well analyzed and evaluated.

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