Section B $-$ Payoff Table

Section B is on the Payoff Table that accompanies this case. This section is worth $20$ marks. Answer all Questions.

A grocer must decide how many cases of milk to stock each week in order to meet demand. The probability distribution of demand is:

$$

Demand $($cases$)$

Probability

$15$

$\mathrm{.}20$

$16$

$\mathrm{.}25$

$17$

$\mathrm{.}40$

$18$

$\mathrm{.}15$

$$

$1\mathrm{.}00$

$$

Each case costs the grocer $$10,$ who, in turn, sells it for $$12.$ Unsold cases are sold to a local farmer $($who mixes it with feed for livestock$)$ for $$2$ per case. If a shortage exists, the grocer considers the pro$$t of $$2$ per case to be a cost. In addition, customer ill will costs are $$2$ per case. Thus, a shortage cost of $$4$ per case is incurred.

The payoff table is given as:

DEMAND$15161718$Probability$0\mathrm{.}20\mathrm{.}250\mathrm{.}40\mathrm{.}1515302622181622322824$SUPPLY$1714243430186162636$

Question $41(1$ point$)$

$$

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What is the EV when the supply is $15?$

Question $41$ options:

$23\mathrm{.}5$

$25\mathrm{.}3$

$24\mathrm{.}0$

$29\mathrm{.}0$

Question $42(1$ point$)$

$$

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What is the EV when the supply is $17?$

Question $42$ options:

$20\mathrm{.}8$

$21\mathrm{.}5$

$27\mathrm{.}5$

$26\mathrm{.}9$

Question $43(2$ points$)$

$$

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What is the payoff using the Hurwics criteria given that the coefficient of optimism is $0\mathrm{.}2?$

Question $43$ options:

$34$

$29$

$24$

$35$

Question $44(2$ points$)$

$$

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What is the payoff using the$$ MaxiMin criteria?$$

Question $44$ options:

$38$

$26$

$32$

$22$

Question $45(2$ points$)$

$$

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What is the payoff using the Maximax criteria?

Question $45$ options:

$36$

$34$

$20$

$32$

Question $46(2$ points$)$

$$

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What is the payoff using the EV criteria?$$

Question $46$ options:

$21$

$36$

$27\mathrm{.}2$

$35$

Question $47(2$ points$)$

$$

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What is the payoff using the Laplace criteria?$$

Question $47$ options:

$33$

$36$

$26\mathrm{.}5$

$27\mathrm{.}2$

Question $48(4$ points$)$

$$

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What is the best amount to bread to supply using the EOL criteria?

Question $48$ options:

$16$

$17$

$15$

$18$

Question $49(4$ points$)$

$$

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What is the EVPI for this decision problem?

Question $49$ options:

$5\mathrm{.}8$

$27\mathrm{.}2$

$33$

$6$