# Question: Suppose that the manufacturer of Example 9 1 is the kind

Suppose that the manufacturer of Example 9.1 is the kind of person who always worries about losing out on a good deal. For instance, he finds that if he delays expansion and economic conditions remain good, he will lose out by $ 84,000 (the difference between the $ 164,000 profit that he would have made if he had decided to expand right away and the $ 80,000 profit that he will actually make). Referring to this quantity as an opportunity loss, or regret, find

(a) The opportunity losses that correspond to the other three possibilities;

(b) The decision that would minimize the manufacturer’s maximum loss of opportunity.

(a) The opportunity losses that correspond to the other three possibilities;

(b) The decision that would minimize the manufacturer’s maximum loss of opportunity.

## Answer to relevant Questions

With reference to the definition of Exercise 9.16, find the decisions that will minimize the maximum opportunity loss of (a) Ms. Cooper of Exercise 9.12; (b) The truck driver of Exercise 9.13. A small town has two service stations, which share the town’s market for gasoline. The owner of Station A is debating whether to give away free glasses to her customers as part of a promotional scheme, and the owner of ...A statistician has to decide on the basis of one observation whether the parameter θ of a Bernoulli distribution is 0, 1/2 , or 1; her loss in dollars (a penalty that is deducted from her fee) is 100 times the absolute ...Find the value of θ that maximizes the risk function of Example 9.8, and then find the values of a and b that minimize the risk function for that value of θ. Compare the results with those given on page 272. Show that the mean of a random sample of size n is a minimum variance unbiased estimator of the parameter λ of a Poisson population.Post your question