Question
A vendor for the local ballpark food stand is questioning whether to stock his concession with a large or small inventory. He believes that it
A vendor for the local ballpark food stand is questioning whether to stock his concession with a large or small inventory. He believes that it will depend upon the size of the crowd. He has developed a payoff matrix for the various alternatives (stocking decision) and states the nature (size of crowd). What is the answer using the criterion of minimax regret?
| PROFIT | |||
| LARGE | AVERAGE | SMALL | |
| ALTERNATIVES | CROWD | CROWD | CROWD |
| LARGE INVENTORY | $220,000 | $50,000 | -$2,000 |
| SMALL INVENTORY | $90,000 | $70,000 | -$5,000 |
| PROBABILITY | .20 | .50 | .30 |
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Financial Reporting And Analysis
Authors: Lawrence Revsine, Daniel Collins
4th Edition
0073527092, 978-0073527093
