Question: Need help on this question. Don't know where to start. Thanks. An author is trying to choose between two publishing companies that are competing for
Need help on this question. Don't know where to start. Thanks.
An author is trying to choose between two publishing companies that are competing for the marketing rights to her new novel. Company A has offered the author $10,000 plus $2 per book sold. Company B has offered the author $2,000 plus $4 per book sold. The author believes that five levels of demand for the book are possible: 1,000, 2,000, 5,000, 10,000, and 50,000 books sold.
a. Compute the payoffs for each level of demand for company
b. A and company B.
c. Construct a payoff table, indicating the events and alternative
d. courses of action.
e. Construct a decision tree.
f. Construct an opportunity loss table.
g. Use the Pessimistic (maximin) to choose the best choice.
h. Use the Criterion of realism (Hurwicz) to choose the best choice.
i. Use the Equally likely (Laplace) to choose the best choice.
j. Use the Minimax regret to choose the best choice
k. Use the expected monetary value to make a choice. Probability for the four-level demand
are: 1000 = 0.15, 2000 = 0.20, 5000 = 0.10, 10000 = 0.25, 100000 = 0.30
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