Question
No matter what you found in previous questions, assume the payoff table is as follows. Demand Order Amount 300 400 500 600 300 7800 7800
No matter what you found in previous questions, assume the payoff table is as follows.
Demand | ||||
Order Amount | 300 | 400 | 500 | 600 |
300 | 7800 | 7800 | 7800 | 7800 |
400 | 7600 | 10400 | 10400 | 10400 |
500 | 7400 | 10200 | 13000 | 13000 |
600 | 7200 | 10000 | 12800 | 15600 |
a) Also assume that the probabilities for a demand of 300 is 0.3, for 400 is 0.2, and for 500 is 0.15 (in other words, ignore the probabilities that you computed earlier). What is the expected monetary value for ordering 600 trees?
b) Using the information from the previous question, what is the expected monetary value of the best decision?
c) Using the information from the previous 2 questions, what is the most Sandy should be willing to pay for new information about demand?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started