Homework SourseA concessionaire for the local ballpark has developed a tabl
A concessionaire for the local ballpark has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd).
If the probabilities associated with the states of nature are 0.40 for a large crowd, 0.30 for an average crowd, and 0.30 for a small crowd, determine:
(a) the opportunity loss table.
(b) minimum expected opportunity loss (EOL).
| alternatives | large | average | small |
| Large Inventory | $22,000 | $12,000 | -$2,000 |
| Average Inventory | $15,000 | $12,000 | $6,000 |
| Small Inventory | $9,000 | $6,000 | $5,000 |
Solution
b)
So, minimum EOL = 2400
| large | average | small | |
| Large inventory | 0 | 0 | 8000 |
| Average inventory | 7000 | 0 | 0 |
| Small inventory | 13000 | 6000 | 1000 |
