Question: Course: Business Modeling / Management Science. Note: Do not use excel. Mr Tan sells a popular magazine at his bookshop. He analysed the sales record

Course: Business Modeling / Management Science. Note: Do not use excel.

Course: Business Modeling / Management Science.

Mr Tan sells a popular magazine at his bookshop. He analysed the sales record for this magazine for the last 40 weeks. The demand per week for the period is summarized in the table below. Mr Tan buys the magazines at $5.00 per copy and sells them for a price of $7.00 per copy. At the end of the week, unsold magazines are returned at no cost. The number of magazines he orders is either 40,45,50 or 55 copies per week. (a) Compute the probability distribution for weekly demand of magazines. (2 marks) (b) Determine a pay-off table for the problem. (4 marks) (c) Use expected monetary value (EMV) to determine the best decision. (9 marks) (d) What is the expected monetary value from (c)? (2 marks) (e) Calculate the expected value of perfect information (EVPI) and interpret what it means. (f) Determine the best solution using the minimum expected regret criterion. (3 marks) (5 marks) [Total 25 marks]

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