A concessions manager at the Tech versus A&M football game must decide whether to have the...

Transcribed Image Text:

A concessions manager at the Tech versus A&M football game must decide whether to have the vendors sell sun visors or umbrellas. There is a 35% chance of rain, a 25% chance of overcast skies, and a 40% chance of sunshine, according to the weather forecast in college junction, where the game is to be held. The manager estimates that the following profits will result from each decision, given each set of weather conditions: Weather Conditions Decision Rain Overcast Sunshine 0.35 0.25 0.40 Sun visors $-400 $-200 $1,500 Umbrellas 2,100 -800 a. Compute the expected value for each decision and select the best one. b. Develop the opportunity loss table and compute the expected opportunity loss for each decision. Decision Tables Data Profit Rain Overcast Sunshine EV Sun Visor Probability Sun Visors 0.35 0.25 0.4 -400 -200 1500 Umbrella Umbrellas 2100 -800 Opportunity Loss Table Rain Overcast Sunshine EOL Sun Visor Probability Sun Visors 0.35 0.25 0.4 2500 200 Umbrella Umbrellas 2300 Decision: Minimize your Expected Opportunity Loss A concessions manager at the Tech versus A&M football game must decide whether to have the vendors sell sun visors or umbrellas. There is a 35% chance of rain, a 25% chance of overcast skies, and a 40% chance of sunshine, according to the weather forecast in college junction, where the game is to be held. The manager estimates that the following profits will result from each decision, given each set of weather conditions: Weather Conditions Decision Rain Overcast Sunshine 0.35 0.25 0.40 Sun visors $-400 $-200 $1,500 Umbrellas 2,100 -800 a. Compute the expected value for each decision and select the best one. b. Develop the opportunity loss table and compute the expected opportunity loss for each decision. Decision Tables Data Profit Rain Overcast Sunshine EV Sun Visor Probability Sun Visors 0.35 0.25 0.4 -400 -200 1500 Umbrella Umbrellas 2100 -800 Opportunity Loss Table Rain Overcast Sunshine EOL Sun Visor Probability Sun Visors 0.35 0.25 0.4 2500 200 Umbrella Umbrellas 2300 Decision: Minimize your Expected Opportunity Loss