BJ is the manager of a Grocery Store. She now needs to replenish her supply of strawberries. Her regular supplier can provide as many cases as she wants. However, because these strawberries already are very ripe, she will need to sell them tomorrow. BJ estimates that she will be able to sell 10, 11, 12, or 13 cases tomorrow. She can purchase the strawberries for $3 per case and sell them for $8 per case.However, any unsold case tomorrow will be sold to nearby Cafeterias at a flat price of $2 per case. BJ now needs to decide how many cases to purchase today to be offered for sale tomorrow. BJ has checked the store's records on daily sales of strawberries. On this basis, she estimates that the prior probabilities are 0.2, 0.4, 0.3, and 0.1 for being able to sell 10, 11, 12, and 13 cases of strawberriestomorrow.(a) Develop a decision analysis structured model of this problem using Excel formulas by identifying the decision alternatives, the states of nature, and the payoff table.(b) If BJ is dubious about the accuracy of these prior probabilities and so chooses to ignore them and use the maxi-max criterion, how many cases of strawberries should she purchase?(c) How many cases should be purchased if she uses the maximin criterion?(d) How many cases should be purchased if she uses the Mini-max regret criterion?(e) How many cases should be purchased if she uses the maximum likelihood criterion?(f) How many cases should be purchased if she uses Expected value without perfect information criterion?(g) Explain how can you estimate the value of information for the above case? BJ is the manager of a Grocery Store. She now needs to replenish her supply of strawberries. Her regular supplier can provide as manycases as she wants. However, because these strawberries already are very ripe, she will need to sell them tomorrow. BJ estimates thatshe will be able to sell 10, 11, 12, or 13 cases tomorrow. She can purchase the strawberries for $3 per case and sell them for $8 per case.However, any unsold case tomorrow will be sold to nearby Cafeterias at a flat price of $2 per case. BJ now needs to decide how manycases to purchase today to be offered for sale tomorrow. BJ has checked the store's records on daily sales of strawberries. On this basis,she estimates that the prior probabilities are 0.2, 0.4, 0.3, and 0.1 for being able to sell 10, 11, 12, and 13 cases of strawberriestomorrow.(a) Develop a decision analysis structured model of this problem using Excel formulas by identifying the decision alternatives, the statesof nature, and the payoff table.(b) If BJ is dubious about the accuracy of these prior probabilities and so chooses to ignore them and use the maxi-max criterion, howmany cases of strawberries should she purchase?(c) How many cases should be purchased if she uses the maximin criterion?(d) How many cases should be purchased if she uses the Mini-max regret criterion?(e) How many cases should be purchased if she uses the maximum likelihood criterion?(f) How many cases should be purchased if she uses Expected value without perfect information criterion?(g) Explain how can you estimate the value of information for the above case?

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BJ is the manager of a Grocery Store. She now needs to replenish her supply of strawberries. Her regular supplier can provide as many cases as she wants. However, because these strawberries already are very ripe, she will need to sell them tomorrow. BJ estimates that she will be able to sell 10, 11, 12, or 13 cases tomorrow. She can purchase the strawberries for $3 per case and sell them for $8 per case. However, any unsold case tomorrow will be sold to nearby Cafeterias at a flat price of $2 per case. BJ now needs to decide how many cases to purchase today to be offered for sale tomorrow. BJ has checked the store's records on daily sales of strawberries. On this basis, she estimates that the prior probabilities are 0.2, 0.4, 0.3, and 0.1 for being able to sell 10, 11, 12, and 13 cases of strawberries tomorrow. (a) Develop a decision analysis structured model of this problem using Excel formulas by identifying the decision alternatives, the states of nature, and the payoff table. (b) If BJ is dubious about the accuracy of these prior probabilities and so chooses to ignore them and use the maxi-max criterion, how many cases of strawberries should she purchase? (c) How many cases should be purchased if she uses the maximin criterion?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 47P

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BJ is the manager of a Grocery Store. She now needs to replenish her supply of strawberries. Her regular supplier can provide as many cases as she wants. However, because these strawberries already are very ripe, she will need to sell them tomorrow. BJ estimates that she will be able to sell 10, 11, 12, or 13 cases tomorrow. She can purchase the strawberries for $3 per case and sell them for $8 per case. However, any unsold case tomorrow will be sold to nearby Cafeterias at a flat price of $2 per case. BJ now needs to decide how many cases to purchase today to be offered for sale tomorrow. BJ has checked the store's records on daily sales of strawberries. On this basis, she estimates that the prior probabilities are 0.2, 0.4, 0.3, and 0.1 for being able to sell 10, 11, 12, and 13 cases of strawberries tomorrow. (a) Develop a decision analysis structured model of this problem using Excel formulas by identifying the decision alternatives, the states of nature, and the payoff table. (b) If BJ is dubious about the accuracy of these prior probabilities and so chooses to ignore them and use the maxi-max criterion, how many cases of strawberries should she purchase? (c) How many cases should be purchased if she uses the maximin criterion? (d) How many cases should be purchased if she uses the Mini-max regret criterion? (e) How many cases should be purchased if she uses the maximum likelihood criterion? (f) How many cases should be purchased if she uses Expected value without perfect information criterion? (g) Explain how can you estimate the value of information for the above case?

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