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Bhasker operates a retail shop and sells the high priced "Hot Food" thermoware. Each unit I priced at Rs.250. Experience has shown that the weekly demand schedule for items is as follows :
Demand : 0 1 2 3 4 5 6 7
Probability: 0.082 0.205 0.214 0.184 0.134 0.097 0.058 0.026
Bhasker can get the product on weekly basis from the wholesaler. He must order a fixed quantity a week in advance and any unsold unit have to be returned at the end of the week. The cost of the unit is Rs.150 and Rs.50 is charged for the unit returned, Create a pay-off table and suggest the best strategy for Bhasker. What are the EVPI and EMV for this situation ?
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