You work for a small retail store. You must decide how many cases of kombucha to order. Twenty cases fit on a pallet and because of shipping costs, orders must be placed in multiples of 20. You can either order 20, 40, 60, 80 or 100 cases. Each case costs $15. If you order more than 1 pallet, you receive a discount of 5% per additional pallet ordered (2 pallets would be 5%, 3 would be 10%, etc). The cases can be sold for $25 each. Any that are left unsold can be sold to a discount store for $10. Your records suggest that the probability that you will sell 25 cases is 20%, 45 cases is 45%, 65 cases is 20% and 85 cases is 15%. a) Construct a payoff table to provide reflect the decisions and outcomes What would be your decision based on each of the following? Maximin Maximax Minimax regret Expected value Overall - what would you do? Why?
You work for a small retail store. You must decide how many cases of kombucha to order. Twenty cases fit on a pallet and because of shipping costs, orders must be placed in multiples of 20. You can either order 20, 40, 60, 80 or 100 cases. Each case costs $15. If you order more than 1 pallet, you receive a discount of 5% per additional pallet ordered (2 pallets would be 5%, 3 would be 10%, etc). The cases can be sold for $25 each. Any that are left unsold can be sold to a discount store for $10. Your records suggest that the probability that you will sell 25 cases is 20%, 45 cases is 45%, 65 cases is 20% and 85 cases is 15%.
a) Construct a payoff table to provide reflect the decisions and outcomes
What would be your decision based on each of the following?
- Maximin
- Maximax
- Minimax regret
- Expected value
- Overall - what would you do? Why?
![You work for a small retail store. You must decide how many cases of kombucha to order. Twenty
cases fit on a pallet and because of shipping costs, orders must be placed in multiples of 20. You
can either order 20, 40, 60, 80 or 100 cases. Each case costs $15. If you order more than 1 pallet,
you receive a discount of 5% per additional pallet ordered (2 pallets would be 5%, 3 would be 10%,
etc). The cases can be sold for $25 each. Any that are left unsold can be sold to a discount store for
$10. Your records suggest that the probability that you will sell 25 cases is 20%, 45 cases is 45%, 65
cases is 20% and 85 cases is 15%.
a) Construct a payoff table to provide reflect the decisions and outcomes
What would be your decision based on each of the following?
b) Maximin
c) Maximax
d) Minimax regret
e) Expected value
f) Overall - what would you do? Why?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F73cc3da0-14ba-4384-af5b-aa1cb72f4898%2F565dffdd-6422-48ae-9b0c-8336e62699b4%2F6ph743_processed.png&w=3840&q=75)
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