Question: Waldo Books needs to decide how many copies of a new hardcover release to purchase for its shelves. The store has assumed that demand will be 50, 100, 150, or 200 copies next month, and it needs to decide whether to order 50, 100, 150, or 200 books for this period. Each book costs Waldo $20 and can be sold for $30. Waldo can sell any unsold books back to the supplier for $4.
(a) Which option should Waldo choose if it uses the maximax criterion?
(b) Which option should Waldo choose if it uses the maximin criterion?
(c) Which option should Waldo choose if it uses the equally likely criterion?
(d) Which option should Waldo choose if it uses the criterion of realism with a = 0.7?
(e) Which option should Waldo choose if it uses the minimax regret criterion?