Answer Happy

14. A food canning company has the option to agree at a price at the beginning of the season for the peas that it will need for the year. If the season turns out well there will be a glut and the price will be drop. Conversely a poor season will mean that the price will be higher than that offered at the beginning. There will always be sufficient peas for the company's need

and the company will always buy. Expressing the season as good, average or poor the problem can be summarized in terms of price paid (dollars in thousand per ton) as the table below. Good Season Average Poor Agree price now 20 20 20 Wait 13 22 28 Find the maximin and minimax regret optimal act respectively. Now the price matrix has been changed to the following: Good Season Average Poor 20 20 20 Agree price now Wait 13 22 28 Alternative 11 21 31 Find the minimax regret optimal act. Comment on the result. Hint: Apply the method to the negative of price matrix as the problem is now a minimization one.