Minimax criterion and the maximax criterion

Assignment Help Operation Management

Reference no: EM131278352

Jose and Maria run a small surf-board shop in Rincon. They must order surf-boards for the coming season. Orders for the surf-boards must be placed in quantities of twenty (20). The cost per surf-board is $70 if they order 20, $67 if they order 40, $65 if they order 60, and $64 if they order 80. The surf-boards will be sold for $100 each. Any surf-boards left over at the end of the season can be sold (for certain) at $45 each. If Jose and Maria run out of surfboards during the season, then they will suffer a loss of "goodwill" among their customers. They estimate this goodwill loss to be $5 per customer who was unable to buy a surf-board. Jose and Maria estimate that the demand for surf-boards this season will be 10, 30, 50, or 70 surf-boards with probabilities of 0.2, 0.4, 0.3, and 0.1 respectively.

Explain how many surf-boards they should buy, based on the Expected Value Criterion, Minimax Criterion and the Maximax criterion. Which is more reliable and why?

Reference no: EM131278352

Questions Cloud

Difference between japanese and us interest rates : What factors might lead to persistent covered interest arbitrage opportunities among countries?- The wide difference between Japanese and U.S. interest rates prompted some U.S. real estate developers to borrow in yen to finance their projects. Comm..

Firm save annually in ordering and carrying costs : A produce distributor uses 710 packing crates a month, which it purchases at a cost of $10 each. The manager has assigned an annual carrying cost of 35 percent of the purchase price per crate. Ordering costs are $28. Currently the manager orders once..

Describe the company you chose and the industry they are in : Describe the company you chose and the industry they are in; include an overview of one of their products/services and the markets they serve. Present their current marketing strategy.

Determine the hydraulic efficiency of the turbine : If the stagnation pressure drop across the turbine is 12 psi, determine the hydraulic efficiency of the turbine.

Minimax criterion and the maximax criterion : Jose and Maria run a small surf-board shop in Rincon. They must order surf-boards for the coming season. Orders for the surf-boards must be placed in quantities of twenty (20). The cost per surf-board is $70 if they order 20, $67 if they order 40, $6..

Describe the sources of this renewable resource : State the average amount of energy this renewable source produces. For example, on average, how much energy does a single wind turbine produce in a year? Or, how much energy does a dam produce in a year? Or, how many wind turbines would be needed ..

What might explain the divergent trends in interest rates : Are these inflation and interest rates consistent with the Fisher effect? Explain.- What might explain this difference in interest rates between the United States and Germany?

Company to take to exploit a market? opportunity : When a? company's specialized knowledge is embodied in its? employees, which of the following options would you recommend the company to take to exploit a market? opportunity?

Determine the loss of available energy across the impeller : If the stagnation pressure rise across the impeller is 45 kPa, determine the loss of available energy across the impeller and the hydraulic efficiency of the pump.

User Account

All Pages