Construct an opportunity loss table
The DellaVecchia Garden Center purchases and sells Christmas trees during the holiday season. It purchases the trees for $10 each and sells them for $20 each. Any trees not sold by Christmas day are sold for $2 each to a company that makes wood chips. The garden center estimates that four levels of demand are possible: 100, 200, 500, and 1,000 trees.
a. Compute the payoffs for purchasing 100, 200, 500, or
1,000 trees for each of the four levels of demand.
b. Construct a payoff table, indicating the events and alternative courses of action.
c. Construct a decision tree.
d. Construct an opportunity loss table. Use the Optimistic (maximax) to choose the best choice.
e. Use the Pessimistic (maximin) to choose the best choice.
f. Use the Criterion of realism (Hurwicz) to choose the best choice. α = 0.6
g. Use the Equally likely (Laplace) to choose the best choice.
h. Use the Minimax regret to choose the best choice.
i. Use the expected monetary value to make a choice. ( Probability for the four level demand are :
100 = 0.30
200 = 0.35
500 = 0.20