please show work for sections A,B,C & D

1. (8 pts). Walt's Yachts is planning on purchasing between one and four 40 foot yachts from Bayshore Marine. The amount Bayshore will charge Walt's is a function of the a number of yachts order and is as follows: Number of Yachts Ordered 1 2 3 4 Total Cost $110,000 $150,000 $230,000 $315,000 Walt's plans to sell the yachts for $90,000 each. Any yachts purchased by Walt's and unsold at the end of the season can be sold by Walt's to a tax shelter syndicate for $75,000 each. If demand for the yachts exceeds Walt's supply, it estimates it will suffer a goodwill loss of $5,000 for each unsatisfied customer. A. The manager of Walt's has begun constructing a payoff table for analyzing this problem, but has been called away on business. The values in the cells represent Walt's profit in $1,000's. Complete this table: Number of Yachts Demanded by Customers 2 3 1 -20 -25 -30 Number of 2 15 30 25 Yachts 3 10 Purchased 40 4 0 30 45 1 4 -35 20 35 25 15 O B. If Walt's is extremely risk averse, how many yachts should it purchase? C. Suppose Walt's estimates that the following demand probabilities hold: Demand Probability 1 2 3 4 . 20 . 20 . 30 .30 What is Walt's optimal decision using the expected value criterion? D. Suppose that Walt's could obtain information which would improve the demand estimates. What is the most that Walt's should pay for this information? 1. (8 pts). Walt's Yachts is planning on purchasing between one and four 40 foot yachts from Bayshore Marine. The amount Bayshore will charge Walt's is a function of the a number of yachts order and is as follows: Number of Yachts Ordered 1 2 3 4 Total Cost $110,000 $150,000 $230,000 $315,000 Walt's plans to sell the yachts for $90,000 each. Any yachts purchased by Walt's and unsold at the end of the season can be sold by Walt's to a tax shelter syndicate for $75,000 each. If demand for the yachts exceeds Walt's supply, it estimates it will suffer a goodwill loss of $5,000 for each unsatisfied customer. A. The manager of Walt's has begun constructing a payoff table for analyzing this problem, but has been called away on business. The values in the cells represent Walt's profit in $1,000's. Complete this table: Number of Yachts Demanded by Customers 2 3 1 -20 -25 -30 Number of 2 15 30 25 Yachts 3 10 Purchased 40 4 0 30 45 1 4 -35 20 35 25 15 O B. If Walt's is extremely risk averse, how many yachts should it purchase? C. Suppose Walt's estimates that the following demand probabilities hold: Demand Probability 1 2 3 4 . 20 . 20 . 30 .30 What is Walt's optimal decision using the expected value criterion? D. Suppose that Walt's could obtain information which would improve the demand estimates. What is the most that Walt's should pay for this information