Modify the decision-tree model in Figure 11.13 to use the extended Swanson-Megill (ES-M) approximation for demand instead of the EPT approximation.
Use your ES-M model to calculate expected profit for Order-Quantity values 600, 650, 700, 750, and 800. How do your results compare to those in Figure 11.14?
Figure 11.13

Figure 11.14

Transcribed Image Text:

High Demand (780 Cal) S10,166 680 Calendars True -$4.046 Quantity Demanded $5,882 Med Demand (670 Cal) 63,0% S10,036 Low Demand (615 Cal) 18,5% $9,321 Calendar Sales Quantity Ordered S5.882 High Demand (780 Cal) 18.5% S10465 700 Calendars False -S4.165 Quantity Demanded $5.850 Med Demand (670 Cal 63.0% S10,075 Low Demand (615 Cal) S9.360 $6,000 Decision tree with extended Pearson-Tukey approximation -Simulation with continuous beta distribution = $5.800 $5.600 S5,400T 600 650 700 750 00 850 900 Calendars Ordered