You assign to likely-possibly and slight chance

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Reference no: EM132208800

A concert promoter must decide how many T-shirts to stock for the upcoming concert at the local college. Each T-shirt costs $7 to order and will sell for $15. Assume any leftover T’s can be sold (salvaged) for $2 each. The T-shirts can only be ordered in lots of 200. The promoter predicts that demand for the T-shirts will likely be low (around 500), will possibly be high (around 750), and that there is a slight chance that demand will be very high (around 1000). Assume that your decision alternatives are to order 400, 600, 800, or 1000 T-shirts.

a) What respective probabilities would you assign to “likely”, “possibly”, and “slight chance”, respectively? Make sure your probabilities add up to 100%.

b) Use the probabilities you estimated in part a) to determine the optimal number of T-shirts to order.

c) List the Decision Analysis Table for this problem.

Reference no: EM132208800

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