Quantitative techniques

Question 1 Royalcrop Ltd intends to sign a contract to provide his entire crop to SanBeach Group of hotels for the next two years. Management at Royalcrop must choose to produce one of the following vegetables, namely, corn, tomatoes, beets or asparagus to be grown over an entire 1000 acres. The yields of the vegetables are prone to be affected by the weather to varying degrees. The table below indicates an approximate payoff from the entire land for each vegetable that can be grown in dry, moderate and damp weather. The probabilities for dry, moderate and damp weather are 0.2, 0.5 and 0.3 respectively. Approximate yield in S ALTERNATIVES WEATHER CONDITIONS MODERATE CORN 20,000 TOMATOES 20,000 BEETS ASPARAGUS (a) Determine the optimal decision using the following approach' (i) maximax criterion, (ii) maximin criterion, (iii) equal likelihood criterion. (bi Royalcrop management has no information on how production and prot will shape up. Using the criterion of realism, with a=0.8 , determine the best choice under these conditions. m' (c) Calculate the expected opportunity loss for each decision, and hence determine the optimal decision. E (d} Using Expected MonetaryValue principles, determine the best alternative for investment. E (e) How much would the company be prepared to pay to acquire additional information about the weather