Answer c only.

Blumbergs Department Store will hold a one-month suit sale. The suits can be purchased in lots of 25 each, and the wholesale post per suit is a function of the number of suites ordered, as shown below:

Number of suits ordered	25	50	75	100
Cost per suit (Php)	800	750	700	650

Each suit left over at the end of the month will be sold at the clearance sale for half the retail sales price of Php 1400. If a shopping arises during the month, nothing will be done to replenish inventory, The possible sales levels are 25, 50, 75, and 100, having probabilities of 0.20, 0.30, 0.40 and 0.10, respectively.

a. Construct a payoff table for this decision problem.

b. Construct a decision tree to represent the problem.

c. Fold back the decision tree to determine the optical inventory ordering the decision.

Marketing Analysis. Suppose Blumbergs could purchase the services of a marketing consultant who would conduct a survey that could be summarized by one of two outcomes: O₁ (a favorable market exists for the sale) or O₂ (an unfavorable market exists). The likelihoods, estimated by Blumbergs from past experience with this consultant, are given in Table 2. What is the maximum amount Blumbergs should pay for the consultants services? (Hint: conduct a preposterior analysis).

Table 2

	Sales (states of nature)
P(0/S)	S = 25	S = 50	S = 75	S = 100
O1	0.05	0.50	0.70	0.85
O2	0.95	0.50	0.30	0.15