A building contractor must decide how many mountain cabins to build in the ski resort area of Chickoh-pee. He builds each cabin at a cost of $26,000 and sells each for $33,000. All cabins unsold after...


A building contractor must decide how many mountain cabins to build in the ski resort area of Chickoh-pee. He builds each cabin at a cost of $26,000 and sells each for $33,000. All cabins unsold after 10 months will be sold to a local investor for $20,000. The contractor believes that the demand for cabins follows a Poisson distribution, with a mean of .5. He assumes that any probability less than .01 can be treated as 0. Construct the payoff table and the opportunity loss table for this decision problem.



May 19, 2022
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