Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. Aggie Theme Park Inc. must place an order for ponchos to sell to customers during rain showers. Ponchos are sold for $1. The demand

image text in transcribed
2. Aggie Theme Park Inc. must place an order for ponchos to sell to customers during rain showers. Ponchos are sold for $1. The demand for ponchos depends on the level of rain in the summer. Rain for the summer may be light, normal, heavy or very heavy with probabilities of 0.20, 0.40., 0.25, and 0.15 respectively. Ponchos are purchased by the pallet. One pallet of 10,000 ponchos costs $5,000. Ponchos not sold at the end of the summer can be returned at a value of $0.20 each. Past experience shows that demand for a dry season is 13,000, a normal season is 19,000, a wet season is 28,000 and a very wet season is 36,000. a. Construct the payoff table for this problem. Justify your list of actions. 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 expected value decision rule? 2. Aggie Theme Park Inc. must place an order for ponchos to sell to customers during rain showers. Ponchos are sold for $1. The demand for ponchos depends on the level of rain in the summer. Rain for the summer may be light, normal, heavy or very heavy with probabilities of 0.20, 0.40., 0.25, and 0.15 respectively. Ponchos are purchased by the pallet. One pallet of 10,000 ponchos costs $5,000. Ponchos not sold at the end of the summer can be returned at a value of $0.20 each. Past experience shows that demand for a dry season is 13,000, a normal season is 19,000, a wet season is 28,000 and a very wet season is 36,000. a. Construct the payoff table for this problem. Justify your list of actions. 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 expected value decision rule

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: David Spiceland

11th Edition

1264134525, 9781264134526

More Books

Students also viewed these Accounting questions

Question

What is a memorandum of law?

Answered: 1 week ago