Use decision criterion to determine price that pizza charge

Reference no: EM13123784

Suppose that Pizza King and Noble Greek stop advertising but must determine the price they will charge for each pizza sold. Pizza King believes that Noble Greek's price is a random variable D having the following mass function: P(D = $8) = .25, P(D = $11) = .35, P(D = $13) = .4. If Pizza King charges a price p1 and Noble Greek charges a price p2, Pizza King will sell 110 + 15(p2-p1) pizzas. It costs Pizza King $3.5 to make a pizza. Pizza King is considering charging $5, $6, $8, $9, or $11 for a pizza. Use each decision criterion (maximin, maximax, minimax regret, expected value) to determine the price that Pizza King should charge."

Reference no: EM13123784

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