Problem 2 (21 marks in total) . Lawsons Department Store faces a buying decision for a seasonal product for which demand can be high, medium or low. The purchaser for Lawsons can order one, two, or three lots of the product before the season begins but cannot reorder later. Profit proj ects (in thousands of dollars) are shown as follows: Decision Alternative Sate of Nature High Demand Medium Demand Low Demand S1 S2 S3 Order 1 lot, d1 60 60 50 Order 2 lots, d2 80

80

30

Order 3 lots, d3

100

70

10

The probabilities for the

sates of nature are 0.3, 0.3, and 0.4, respectively.

(a)

(2 marks)

What is the best alternative if the conservative approach is used?

(Please,

show your steps.)