3. A student group at a university raises funds by undertaking small projects. T

Question

3. A student group at a university raises funds by undertaking small projects. The group's next project requires a decision concerning the number of copies of a brochure to be printed for homecoming weekend. The printing order must be a multiple of 500. The size of the homecoming crowd is uncertain because it depends on weather conditions. The following payoff table has been prepared (payoffs are net profits in dollars). Size of Crowd 1000 2000 2500 3000 Above average Average Below Average 200 200 200 300 300 150 400 250 100 500 200 50 450 150 a) (10 pts) Develop the regret table from this payoff table and use it to determine the best choice for the number of brochures to print based on the criterion of minimax regret. b) (15 pts) The group estimates that the probability of an above average crowd is .20, the probability of an average crowd is .60, and the probability of a below average crowd is .20. Using the criterion of mean profit (EMV), which is the best brochure size to print? Justify your answer by showing EMV for each of the five printing order sizes. c) (10 pts) The group estimates that the probability of an above average crowd is .20, the probability of an average crowd is .60, and the probability of a below average crowd is .20. Using the criterion of mean regret (EOL), which is the best brochure size to print? Justify your answer by showing EOL for each of the five printing order sizes.

Explanation / Answer

Ans:

a)Regret or opportunity loss table

minumum of maximum regrets of respective alternatives is 100 which is given by the crowd size 2000.

So best choice is crowd size 2000.

b)

Maximum EMV=270 is given by the crowd size 1500.So,choose crowd size 1500.

c)

Expected EOL is minimum for crowd size 1500 i.e 50,so choose crowd size 1500.

1000 1500 2000 2500 3000 above average 300 200 100 0 50 average 100 0 50 100 150 below average 0 50 100 150 200 Maximum 300 200 100 150 200

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.