Jim has estimated that the probabilities of demand for 200, 400, 600, and 800 boxes of Christmas cards are 0.30, 0.25, 0.35, and 0.10 respectively.

a. Choose the best order quantity using this probability data.

b. What is the most that Jim should pay for additional information about the holiday demand for Christmas cards?

Jim is the inventory manager at a Target store and needs to place an order for Christmas cards in October. He is considering order quantities of 200, 400, 600, and 800 boxes of cards. The following decision table shows the payoffs for demand levels of the same amounts during the Christmas season.
Demand Alternative 200 400 600 800 Order 200 boxes $3,800 $3,800 $3,800 $3,800 Order 400 boxes $1,200 $7,600 $7,600 $7,600 Order 600 boxes -$1,400 $5,000 $11,400 $11,400 Order 800 boxes -$4,000 $2,400 $8,800 $15,200.AppendixLO1