(a) Blossom's Flowers purchases roses for sale for a grand graduation ceremony of XYZ University. The roses are purchased for K10 a dozen and sold for K20 a dozen. Any roses not sold on graduation ceremony day can be sold for K5 per dozen. The owner will purchase 1 of 3 amounts of roses on graduation ceremony day: 100, 200 or 400 dozen roses. Given 0.2, 0.4 and 0.4 are probabilities for the sale of 100, 200 or 400 dozen roses, respectively. i. Construct the conditional profit table. ii. Construct the expected profit table. iii. Determine the action alternative associated with the maximization of expected

(b) Small scale maize farmers in Zambia have been enjoying government subsidy since 2002 in the form of fertilizer support programme (FSP) to promote increased production since maize is a staple food. There are rumors that the government will reduce the subsidy for the next crop. The maize farmers have to decide whether to increase or reduce the number of hectares they farm, or keep them the same. The payoffs in K'000 for these strategies under the same subsidy regime and under reduced subsidies are:

Action State of nature Increased 80000 40000 The same 40000 15000 Decreased 20000 17000

Suggest what the farmers should do using: i. The maximax decision rule ii. The maximin decision rule iii. The savage decision rule iv. The Hurwicz rule with = 0.8