Company buys its merchandise for 10 and sells for each item

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Reference no: EM13470312

A company purchases its merchandise for $10 and sells for each item for $20. The pay-off table for the problem is given below.

 

Demand for Item

Alternative

Low

Medium

High

Do nothing

0

0

0

Order Low

30,000

30,000

30,000

Order Medium

10,000

50,000

40,000

Order High

-10,000

40,000

80,000

Probability

0.3

0.3

0.4

What is the decision based on each of the following criteria?

(a) EMV approach

Reference no: EM13470312

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