6. The Steak and Chop Butcher Shop purchases steak from a local meatpacking house. The meat is purchased on Monday at $2.00 per pound, and the shop sells the steak for $3.00 per pound. Any steak left over at the end of the week is sold to a local zoo for $.50 per pound. The possible demands for steak and the probability of each are shown in the following table:

Demand (lb.) 20 Probability 0.10

21 0.20

22 0.30

23 0.30

24 0.10

Total 1.00

The shop must decide how much steak to order in a week. Construct a payoff table for this decision situation and determine the amount of steak that should be ordered, using expected value.

8. A local real estate investor in Orlando is considering three alternative investments: a motel, a estaurante orna theater, Profits from the motele prestane the will be affected by the availabili of gasoline and the number of tourists; profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment: Gasoline Availability Shortage Stable Supply Investment Surplus Motel $15,000 $20,000 Restaurant $-8,000 2,000 6,000 8,000 6,000 6,000 5,000 Theater Determine the best investment, using the following decision criteria. a. Maximax b. Maximin c. Minimax regret d. Hurwicz (a = .4) e. Equal likelihood