- Question 1 3 Marks Based On A New Technological Approach A Manufacturer Has Developed A Color Tv Set With A 45 In Pict 1 (66.47 KiB) Viewed 58 times
Question 1 [3 Marks Based on a new technological approach, a manufacturer has developed a color TV set with a 45-in picture tube. The owner of a small retail store estimates that at the selling price of $2,800 the probability values associated with selling 2, 3, 4, or 5 sets during the three months of concern are 0.30, 0.40, 0.20, and 0.10, respectively. Based only on these probability values, how many sets should the retailer order for stock, assuming no reorders are possible during the period? [3] Question 2 (18 Marks (a) For the inventory decision situation in Question 1, the profit margin for each set sold is $200. If any sets are not sold during the three months, the total loss per set to the retailer will be $300. Based on these eco- nomic consequences alone, and ignoring the probability values identified in Question 1, determine the best decision act from the standpoint of the maximin and of the maximax criteria. [6] (b) Determine the best decision act from the standpoint of the minimax regret criterion for the decision situation described in Question 1 and Question 2 (a). [6] (e) With reference to Question 1 and Question 2 (a), determine the best act from the standpoint of the expected payoff criterion. [6]