Reference no: EM133450591

Question: Review the following scenario, and answer the questions:

A market buys T-bone steaks from a university's animal science department. The purchase price is $2.50 per pound, and the market sells the stick for $4.00 per pound. Steak left over at the end of the week is sold to a local cannery for $0.50 per pound. According to sales records over the past 100 weeks, demand has been as follows:

Weekly demand	Number of weeks
10	10
11	20
12	20
13	30
14	10
15	10
TOTAL	100

Construct a payoff table for the various demand and stocking quantities. Determine the best amount to stock using each of the following criteria: 

a)     Laplace 

b)     maximin 

c)     maximax 

d)     Hurwicz (a = 0.2) 

e)     regret (minimax)    

 If the market can obtain perfect information concerning the following week's demand for T-bone steak, what will the expected profit be? Determine the optimal stock quantity.