Discussion:
Q: Larry Jacava is considering producing a novelty item for golfers that will be sold through pro shops. Larry has decided on a selling price of $3.50 for the item. The item's variable cost of production is $2.00 per unit with a fixed cost of $3,750. Larry has marketed his production to local pro shops and believes the demand for the item will be either 2,000 units, 3,000 units, 4,000 units, or 5,000 units.
a) Set up the payoff table for Larry's decision. Determine the number of units that Larry should produced using each of the following criteria.
b) Maximax criteria.
c) Maximim criteria
d) Minimax regret criteria.( for this please set up an opportunity loss table , please state clearly which action Larry should take based on each of the three decision criteria)