Problem: Lakewood Fashions must decide how many lots of assorted ski wear to order for its three stores. Information on pricing, sales, and inventory costs has led to the following payoff/net profit table (stated in thousands of dollars).
|
Order Size
|
Low
|
Demand
Medium
|
High
|
|
1 lot
|
12
|
15
|
15
|
|
2 lots
|
9
|
25
|
35
|
|
3 lots
|
6
|
35
|
60
|
a. What decision should be made by the optimist and why?
b. What decision should be made by the conservative and why?
c. What decision should be made using the minimax regret approach and why?