Below You Are Given a Profit Payoff Table Involving Two

question 23

Multiple Choice

Below you are given a profit payoff table involving two decision alternatives and three states of nature. ​ The probability that s₁ will occur is .2; the probability that s₂ will occur is .6.
The recommended decision based on the expected value criterion is

• A) A.
• B) B.
• C) Both A and B are optimal.
• D) A third alternative is required for an optimal solution.

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Definitions:

Net Accounts Receivable

The amount of money owed by customers for goods or services that is expected to be collectible, after accounting for allowances for doubtful accounts.

Net Cash Sales

The amount of cash generated from sales transactions, after deducting returns, allowances, and discounts.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit customers by comparing net credit sales to the average accounts receivable.

Inventory Turnover

A measure of how frequently a company sells and replaces its stock of goods during a certain period. It indicates the efficiency of inventory management.