Practice Final

# Practice Final - 1 The Palm Garden Greenhouse specializes...

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1. The Palm Garden Greenhouse specializes in raising carnations that are sold to florists. Carnations are sold for \$3.00 per dozen; the cost of growing the carnations is \$2.00 per dozen. Any carnations left at the end of the day are sold to local restaurants and hotels for \$0.75 per dozen. The estimated cost of ill will if demand is not met is \$1.00 per dozen. The expected daily demand for the carnations is as follows: Demand Probability 20 .05 22 .10 24 .25 26 .30 28 .20 30 .10 a. Develop the payoff table to determine how much to stock. b. Determine the optimal decision using the probabilities. c. Compute the expected value of perfect information.

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2. The Milford Trucking Company of Chicago has requests to haul two shipments, one to St. Louis and one to Detroit. Because of a scheduling problem, Milford will be able to accept only one of these assignments. The St. Louis customer has guaranteed a return shipment and Milford stands to make \$2000 if they accept this job. But the Detroit customer cannot guarantee a return shipment and the truck might have to return empty. Milford will make \$1500 for this assignment. However, there is a chance that a return
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Practice Final - 1 The Palm Garden Greenhouse specializes...

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