Question

Richard Head, owner of Whoah, Sweet Shoes must place orders with an athletic shoe manufacturer 6 months prior to the time the shoes go on the shelf. Specically, Richard must decide on October 1st how many pairs of the manufacturer's newest "Mud Puppy\" model to order for sale during the upcoming 2023 spring/ summer season. This popular model costs the store $88. per pair. Furthermore, each pair can be sold to customers at $175.00 per pair. Any pairs unsold at the end of the summer season will be sold in a closeout sale next fall for $74 per pair. The probability distribution of consumer demand for these shoes during the upcoming season has been estimated as follows: Demand 14-0 165 190 215 24-0 Probability 0.07 0.22 0.33 0.30 0.08 Richard also knows from experience that if their stores are stocked out [i.e., no more inventory] and the customer wants it, he will lose business from other related products because customers will shop at his competitors in the future and probably never return. He quanties lost sales to be valued at $32.00 per pair whenever customer demand for this shoe exceeds his supply. Help Richard determine the right number of pairs of Mud Puppies to order for the upcoming year by answering the questions below. The manufacturer will take orders only for multiples of 10. Assuming the demand and costing information above is accurate, answer the following questions" by developing a spreadsheet model using Excel [DO NOT use paper and pencil for this question]: Construct a payoff matrix. a] What decision should be made according to the EM? decision rule? b] What decision should be made according to the maximax decision rule? c] What decision should be made according to the maximin decision rule? d] What decision should be made according to the minimax regret decision rule? e] What decision should be made according to the EOL decision rule? f] What is the very most that Richard should be willing to pay to obtain a forecast of customer demand that is 100% accurate? g] Which decision rule would you recommend Richard use? Provide a clear explanation why you are recommending a particular decision rule