The Palm Garden Greenhouse specializes in raising carnations that are sold to florists. Carna

tions are sold for $3.00 per dozen; the cost of growing the carnations and distributing them to

the florists is $2.00 per dozen. Any carnations left at the end of the day are sold to local restau

rants and hotels for $0.75 per dozen. The estimated cost of customer ill will if demand is not met

is $1.00 per dozen. The expected daily demand (in dozens) for the carnations is as follows:

Daily Demand Probability

20 .05

22 .10

24 .25

26 .30

28 .20

30 .10

1.00

a. Develop the payoff table for this decision situation.

b. Compute the expected value of each alternative number of (dozens of) carnations that could

be stocked and select the best decision.

c. Construct the opportunity loss table and determine the best decision.

d. Compute the expected value of perfect information.