Birka Styles & Co is introducing a new line of beachwear for their retail stores. The manager needs to decide how many lots of the new beachwear to order for their stores. The marketing came up with a payoff table (see below) considering information about the price, projected sales level, and cost of inventory and ordering.    DEMAND Order size Low Medium High 1 lot 12,000 15,000 15,000 2 lots 9,000 25,000 35,000 3 lots 6,000 35,000 60,000 The owner found out that: P(Low demand) = 1/3; P(Med demand) = 1/2; P(High demand) = 1/6. Which of the following decision is NOT true? A)The best decision is to order 3 lots for a payoff of $29,500. The probabilities gave me enough information to perform a Laplace approach. B)The best decision is to order 3 lots for a payoff of $29,500. The probabilities gave me enough information to perform the EMV approach. C)The EVPI is $2,000. D)The EVwPI is $31,500.

Practical Management Science
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Author:WINSTON, Wayne L.
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Birka Styles & Co is introducing a new line of beachwear for their retail stores. The manager needs to decide how many lots of the new beachwear to order for their stores. The marketing came up with a payoff table (see below) considering information about the price, projected sales level, and cost of inventory and ordering. 

  DEMAND
Order size Low Medium High
1 lot 12,000 15,000 15,000
2 lots 9,000 25,000 35,000
3 lots 6,000 35,000 60,000

The owner found out that:

P(Low demand) = 1/3; P(Med demand) = 1/2; P(High demand) = 1/6.

Which of the following decision is NOT true?

A)The best decision is to order 3 lots for a payoff of $29,500. The probabilities gave me enough information to perform a Laplace approach.
B)The best decision is to order 3 lots for a payoff of $29,500. The probabilities gave me enough information to perform the EMV approach.
C)The EVPI is $2,000.
D)The EVwPI is $31,500.
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