A DECISION PAYOFF MODEL

Rutherford Retail is considering the quantity of smartwatches $,$ or $250$ units$)$

to order and, hopefully, sell during the next holiday sale. They believe there will be low

demand $(100$ units$)$ for the smartwatch with $50\%$ chance, moderate demand $(150$

units$)$ with $40\%$ chance, and high demand with $(200$ units$)$ with $10\%$ chance.

Rutherford buys each smartwatch at $$240$ and sells them for $$400$ each.

Smartwatches not sold over the holidays are guaranteed to be sold off during post$-$

holiday sale at $$200$ each. They decided to create a payoff model for generating gross

profit as follows:

Payoff price $$ minimum$\{$order$,$ demand