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Question on decision theory ; A hawker buys a unit of her merchandise at $ 100 and sells it at $ 200 during the day
Question on decision theory ;
A hawker buys a unit of her merchandise at $ 100 and sells it at $ 200 during the day and $ 120 on the following day. The distribution of demand and respective probabilities based on past data are as shown below:
Demand | 10 | 15 | 20 | 25 | 30 |
Probability | 0.20 | 0.25 | 0.30 | 0.15 | 0.10 |
Generate the following a conditional pay-off table and determine her optimal strategy based on the following criteria: i) Maximax criterion ii) Maximin criterion iii) Laplace criterion iv) Expected monetary value
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