( 10 Marks) 7. Sonia is planning to start a new designer cloth shop. Her problem...

 

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( 10 Marks) 7. Sonia is planning to start a new designer cloth shop. Her problem is to decide how large her shop should be. The annual returns will depend on both the size of her shop and a number of marketing factors related to the current market conditions and demand for designer wear. After a careful analysis, Sonia came up with the following table: ( Replace NNNN by the last four digits of your ID Number. For Example if your id no is 20F12345 then replace NN by 2345) Size of Shop Good Market (R.O.) Fair Market (R.O.) Poor market (R.O.) Small Scale 1024 NNNN -500 Medium Scale 1500 3000 -2000 Large Scale 2000 3000 -4000 Very Large Scale 3000 a) What will be her decision based on Pessimist criteria? 5000 -7000 (5 Marks) b) What will be her decision based on Optimistic criteria? (5 Marks) c) What will be her decision based Laplace criteria? (5 Marks) ( 10 Marks) 7. Sonia is planning to start a new designer cloth shop. Her problem is to decide how large her shop should be. The annual returns will depend on both the size of her shop and a number of marketing factors related to the current market conditions and demand for designer wear. After a careful analysis, Sonia came up with the following table: ( Replace NNNN by the last four digits of your ID Number. For Example if your id no is 20F12345 then replace NN by 2345) Size of Shop Good Market (R.O.) Fair Market (R.O.) Poor market (R.O.) Small Scale 1024 NNNN -500 Medium Scale 1500 3000 -2000 Large Scale 2000 3000 -4000 Very Large Scale 3000 a) What will be her decision based on Pessimist criteria? 5000 -7000 (5 Marks) b) What will be her decision based on Optimistic criteria? (5 Marks) c) What will be her decision based Laplace criteria? (5 Marks)

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SOLUTION Assuming NNNN 2345 a The pessimistic approach can be also interpreted as the maximin criter... View the full answer