7. Nazri Grocery has to decide how many cases of milk to stock each week to meet demand. Each case costs Nazri RM 9 and selling price is RM 12. Any case unsold at the end of the week can be disposed at the rate of RM 2 only. Nazri also estimates RM 3 as a shortage cost per case. The following table shows the probability distribution of demand. Demand (Cases) 12 13 14 15 Probability 0.20 0.30 0.30 0.20 (a) Construct a payoff table for the problem. (b) Determine the best stocking policy by expected value approach. (c) Construct opportunity loss table and find the best alternative by expected opportunity loss principle. (d) Compute EVPI.

7. Nazri Grocery has to decide how many cases of milk to stock each week to meet demand. Each case costs Nazri RM 9 and selling price is RM 12. Any case unsold at the end of the week can be disposed/ at the rate of RM 2 only. Nazri also estimates RM 3 as a shortage cost per case. The following table shows the probability distribution of demand. (a) Construct a payoff table for the problem. (b) Determine the best stocking policy by expected value approach. (c) Construct opportunity loss table and find the best alternative by expected opportunity loss principle. (d) Compute EVPI