Assignment:
The question I have trouble with is
1. For the optimal solution, given the current probabilities of the state of nature, what would be the range of optimality (that is the range of values for its payoff where that decision alternative will still remain optimal) for its payoffs compared to the closest Expected Value.
2. Lawson's Department Store faces a buying decision for a seasonal product for which demand can be high or low. The purchaser for Lawson's can order 1, 2, or 3 lots of the product before the season begins but cannot reorder later. Profit projections (in thousands of dollars) are shown.
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State of Nature
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Decision Alternative
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High Demand (S1)
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Low Demand (S2)
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Order I lot, DI
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60
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50
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Order 2 lots, D2
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80
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30
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Order 3 lots, D3
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100
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10
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P(Si)
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0.4
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0.6
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