Payoff matrix-provide conservative-min-max regret decisions

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Reference no: EM131124342

A purchasing manager is determining the quantity of items to purchase of a product family for the upcoming summer season. There are 4 demand scenarios: 100k, 150k, 200k, or 250k units. The options are to purchase at the same 4 levels of demand. Each item costs $180 and sells for $300. Demand unsatisfied by the initial stock goes into expedited production by the supplier and the item costs increase by $75 (just for the extra units acquired in a rush and placed in backorder with the customer). The maximum that can be produced in an expedited manner is 75K units. Overstock above the demand is sold on secondary channels for about $165 ($15 loss). Prepare a payoff matrix and provide the conservative and min-max regret decisions.

Reference no: EM131124342

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