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The ice cream producer considers the size of ice cream production . His profit depends on the weather. If he manufactures big amount of ice

The ice cream producer considers the size of ice cream production . His profit depends on the weather. If he manufactures big amount of ice cream and weather is bad, he shall bear additional cost from accepting returns from distribution. On the other hand - if he produces small amount of ice cream and weather is good, the produces will bear opportunity cost. In each case he shall achieve the lower profit. Based on his experience the producer prepared the following pay-off matrix:

Weather

Probability

Small amount

Medium amount

Big amount

Bad

0.2

1000

800

500

Average

0.5

700

900

800

Nice

0.3

450

750

1100

Recommend what amount of ice cream the producer should manufacture

using expected values method.What amount should he produce?

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