ttps://d2vlcm61l7u1fs.cloudfront.net/media%2F6ea%2F6eaee678-c71a-497b-824c-ad1d87181ee3%2FphpiDVGeD.png State of Nature Medium Demand S2 60 80 70 High Demand Decision Alternative Order 1 lot, di Order 2 lots, d2 Order 3 lots, ds 60 80 100 Low Demand S3 50 30 10 At each preseason sales meeting, the vice president of sales provides a personal opinion regarding potential demand for this product. Because of the vice president’s enthusiasm and optimistic nature, the predictions of market conditions have always been either “excellent” (E) or “very good” (V) Probabilities are as follows: P(E) = 0.70 P(V) = 0.30 P(m | E ) 0.34 P(s21E ) = 0.32 P(83 | E ) = 0.34 P(s, Iv ) = 0.20 P(s2|V) = 0.26 P(83 1 V ) = 0.54 What is the optimal strategy when the prediction is “E” (excellent)? ● d1 O d2 d3 All of the above are optimal strategies. Given the setting at Q6 above, what is the optimal strategy when the prediction is “V” (very good)? d1 d2 d3 All of the above are optimal strategies.

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State of Nature Medium Demand S2 60 80 70 High Demand Decision Alternative Order 1 lot, di Order 2 lots, d2 Order 3 lots, ds 60 80 100 Low Demand S3 50 30 10 At each preseason sales meeting, the vice president of sales provides a personal opinion regarding potential demand for this product. Because of the vice president’s enthusiasm and optimistic nature, the predictions of market conditions have always been either “excellent” (E) or “very good” (V) Probabilities are

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