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A farmer intends to drill a well for his herd. In the past, only 80% of the wells drilled in this area were successful at 12 metres of depth. On finding no water at 12 metres, some farmers drilled further upto 18 metres but only 30% struck water at 18 meters. The prevailing cost of drilling the first 10 metres is shs. 500,000 and drilling an extra meter costs shs. 60,000. the farmer knows that if he does not get his own well, he will have to pay one million shillings to get water from a neighbor's well.
Required;
Advise the farmer on which strategy to take.
A retail store desires to determine the optimal daily order size for a perishable item. The store buys the perishable item at the rate of shs. 600 per kg and sells at the rate of shs. 900 per kg. if the order size is more than the demand, the excess quantity can be sold at shs. 750 per kg in a secondary market; otherwise, the opportunity cost for the store is shs. 100 per kg for the unsatisfied portion of the demand. Based on the past experience, it is found that the demand varies from 50 kgs to 200 kgs in steps of 50 kgs. The possible values of the order size are from 100 kgs to 300 kgs in steps of 100 kgs.
REQUIRED;Construct a payoff table and using maximax, maximin, lapace and minimax regret criterions, advise the retail store owner on the optimal order sizes
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