Use the following information to answer question. A manufacturer is planning its production for the next 6
Question:
Use the following information to answer question. A manufacturer is planning its production for the next 6 months. It has to decide how much of an important ingredient to keep in inventory. The demand for the ingredient may be low, medium, or high. The manufacturer is considering holding either a low or a high amount of inventory. The possible payoffs for all the combinations of inventory holding and demand are shown here.
An economics consultant predicts that the demand for the ingredient will be low in the next 6 months. In the past few years, this economist has provided forecasting about the demand for the ingredient. The track record of the consultant is summarized by the following conditional probability distribution:
Assume that this time, the economist predicts a low demand for the future. Find the posterior distribution of S1, of S2, and of S3.
Step by Step Answer:
Statistics For Business And Financial Economics
ISBN: 9781461458975
3rd Edition
Authors: Cheng Few Lee , John C Lee , Alice C Lee