ENGL
HW3_Solutions

# HW3_Solutions - IE:3610 Stochastic Modeling(Fall 2015...

• Homework Help
• 5
• 100% (1) 1 out of 1 people found this document helpful

This preview shows pages 1–2. Sign up to view the full content.

IE:3610 Stochastic Modeling (Fall 2015) Homework 3 Solutions HW3 (due Thu, Sep 17): 16.2-3(a,b,c,d, minimax regret,Hurwicz); 16.2- 6 (a,b,c, minimax regret, Hurwicz); 16.2-7 (a,b,maximin, max likelihood, minimax regret, Hurwicz); 16.2-8. Note: Use alpha=0.5 in the Hurwicz cri- terion. Additionally, find the EVPI in each of the problems 16.2-3, 16.2-6, 16.2-7, 16.2-8. 16.2-3(a,b,c, minimax regret, Hurwicz, EVPI) Solution: a) Table 1: 16.2-3 payoff table Sell 12 Sell 13 Sell 14 Sell 15 Order 12 132 132 132 132 Order 13 125 143 143 143 Order 14 118 136 154 154 Order 15 111 129 147 165 Prior Prob 0.1 0.3 0.4 0.2 b) According to the maximin criterion, Jean should purchase 12 cases Table 2: 16.2-3 maximum payoff criterion Sell 12 Sell 13 Sell 14 Sell 15 worst case payoff Order 12 132 132 132 132 132 Order 13 125 143 143 143 125 Order 14 118 136 154 154 118 Order 15 111 129 147 165 111 c) She will be able to sell 14 cases with highest probability and the maximum possible profit from selling 14 cases is earned when she buys 14 cases. Hence, according to the maximum likelihood criterion, Jean should purchase 14 cases.

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.
• Spring '08
• KROKHMAL
• Ode, minimax regret

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern