s Department Store faces a buvine decision for a seasonal product for which Laws

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s Department Store faces a buvine decision for a seasonal product for which Lawson's can order 1.2, or 3 lots demand can be high, medium, or low. The purchaser for of the product before the season begins but sands of dollars) are shown. efore the season begins but cannot reorder later. Profit projections (in thou- State of Nature Medium DemandLow Demand Decision Alternative Order 1 lot, d Order 2 lots, d Order 3 lots, ds High Demand s 1 60 80 100 s3 50 30 10 60 80 70 a. If the prior probabilities for the three states of nature are 03,0.3, and 0.4, respectively b. At each preseason sales meeting, the vice president of sales provides a personal opin- what is the recommended order quantity? ion regarding potential demand for this product. Because of the vice president's enthusiasm and optimistic nature, the predictions of market conditions have always been either "excellent" (E) or "very good" (V). Probabilities are as follows: P(E) = 0.70 P(V) = 0.30 P(si l E) = 034 P(s2IE) = 0.32 P(531E)-0.34 P(silv) = 0.20 P(s21 V) = 0.26 P(n|v)-0.54 What is the optimal decision strategy?

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