The Table Shows Both Prospective Profits and Losses for a Company,depending

question 45

Essay

The table shows both prospective profits and losses for a company,depending on what decision is made and what state of nature occurs.Use the information to determine what the company should do. $$\begin{array} { c | ccc } && { \text { State of Nature } } \\\text { Decision } & s _ { 1 } & s _ { 2 } & s _ { 3 } \\\hline d _ { 1 } & 30 & 80 & - 30 \\d _ { 2 } & 100 & 30 & - 40 \\d _ { 3 } & - 80 & - 10 & 120 \\d _ { 4 } & 20 & 20 & 20\end{array}$$
a.if an optimistic strategy is used.
b.if a conservative strategy is used.
c.if minimax regret is the strategy.

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Definitions:

Cost of Goods Purchased

The total expense incurred by a company to buy the goods it has sold or will sell, excluding any indirect costs.

Finished Goods Inventory

The value of a company's inventory of products that are complete and ready for sale.

Cost of Goods Manufactured

The total cost of goods completed during a specific period, including labor, materials, and overhead.

Cost of Goods Available for Sale

The total cost of beginning inventory plus the cost of goods purchased or manufactured during an accounting period, before any sales are subtracted.