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Borneo Motors (BM) must decide how many electric vehicles(EV) to stock per year to meet demand. The probability distribution of demand during a month is
Borneo Motors (BM) must decide how many electric vehicles(EV) to stock per year to meet demand. The probability distribution of demand during a month is shown in the following table: Demand Probability 21 0.1 22 0.3 23 0.4 24 0.2 Each EV costs the BM $60,000 and sells for $90,000. To minimize operational costs, unsold EVs are sold to a local car distributor for $45,000 per unit. If there is a shortage, BM considers the cost of customer ill-will and lost profit to be $12,000 per unit. BM must decide how many units of EVs to purchase per yer. a. Construct the payoff table for this decision situation. [4 mark] b. Compute the expected value of each alternative number of EVs that could be stocked and select the best decision. [2 mark] c. Construct the opportunity loss table and determine the best decision. [4 marks] d. Compute the expected value of perfect information. [2 mark]]
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