Kathy is the manager of a Grocery Store. She now needs to replenish her supply of strawberries. Her regular supplier can provide as many cases as she wants. However, because these strawberries are already very ripe, she will need to sell them tomorrow and then discard any unsold remaining. Kathy estimates that she will be able to sell 10, 11, 12, or 13 cases tomorrow. She can purchase the strawberries for $3 per case and sell them for $8 per case. Kathy now needs to decide how many cases to purchase.

a. Develop a payoff table for this problem by identifying the decision alternatives, the states of nature, and the payoffs.

b. Provide an analysis that would satisfy an optimistic approach and another that would satisfy a pessimistic approach.

c. What is the best option that minimizes regrets?

d. Kathy has checked the stores records on daily sales of strawberries. Based on this, he estimates that the likelihoods (i.e., prior probabilities) are 0.2, 0.4, 0.3, and 0.1 for being able to sell 10, 11, 12, and 13 cases of blueberries tomorrow. What would be the optimal choice/decision now?

e. What is the value of perfect information under the probabilities given in (d)?