An Appliance Dealer Must Decide How Many (If Any)new Microwave

question 70

Essay

An appliance dealer must decide how many (if any)new microwave ovens to order for next month.The ovens cost $220 and sell for $300.Because the oven company is coming out with a new product line in two months,any ovens not sold next month will have to be sold at the dealer's half price clearance sale.Additionally,the appliance dealer feels he suffers a loss of $25 for every oven demanded when he is out of stock.On the basis of past months' sales data,the dealer estimates the probabilities of monthly demand (D)for 0,1,2,or 3 ovens to be 0.3,0.4,0.2,and 0.1,respectively.The dealer is considering conducting a telephone survey on customers' attitudes towards microwave ovens.The results of the survey will either be favorable (F),unfavorable (U),or no opinion (N).The dealer's probability estimates for the survey results based on the number of units demanded are: ​
a.What is the dealer's optimal decision without conducting the survey?
b.What is the EVPI?
c.Based on the survey results,what is the optimal decision strategy for the dealer?
d.What is the maximum amount he should pay for this survey?

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Definitions:

Identity Achievement

Erikson’s term for the attainment of identity, or the point at which a person understands who they are as a unique individual, in accord with past experiences and future plans.

Bicultural Identity

The combination of identifying with and integrating aspects of two different cultures.

Psychosocial Development

A domain of development that involves changes in how individuals understand themselves and others, including emotions, personality, and social interactions.

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An educational approach that emphasizes a broad range of subjects and experiences, aiming to develop varied skills and comprehensive knowledge in students.