Adele Weiss manages the campus flower shop. Flowers must be ordered three days in advance from her supplier in Mexico. Advance sales are so small that Weiss has no way to estimate the demand for the red roses. She buys roses for $15 per dozen and sells them for $40 per dozen. Pay-off table for the problem is given below.

Requirements:

What is the decision based on each of the following criteria? Show work in making the decision for each criterion.

a) EMV approach

b) EOL approach

Demand for Red Roses Low (25 dozen) Medium (60 dozen) High (130 dozen) 0 0 0 Alternative Do nothing Order 25 dozen 300,000 Order 60 dozen 100,000 Order 130 dozen -100,000 Probability 0.3 300,000 600,000 400,000 0.4 300,000 600,000 900,000 0.3