Rolley’s Rentals of Lahaina, Hawaii, rents bicycles and roller skates. Mr. Rolley is considering expanding his line of bicycle rentals to include tandem bicycles. He estimates that he will need a...

Rolley’s Rentals of Lahaina, Hawaii, rents bicycles and roller skates. Mr. Rolley is considering expanding his line of bicycle rentals to include tandem bicycles. He estimates that he will need a maximum of three tandem bicycles to handle estimated demand for the upcoming year.

 Profitability from the tandem bicycles in the upcoming year will be a function of the number of tandem bicycles purchased and the number of sunny days during the year in Lahaina. To help him determine how many tandem bicycles to purchase, Mr. Rolley has developed the following payoff table representing expected profits.

a. What decision alternatives, if any, are dominated?

 b. If Rolley’s wishes to minimize its maximum regret, how many tandem bicycles should it purchase?

 c. Suppose that Rolley’s believes that the likelihood of 250 sunny days in Lahaina over the upcoming year is equal to the probability of 325 sunny days. In addition, the probability of 300 sunny days is twice as great as the probability of 325 sunny days and three times as great as the probability of 275 sunny days. Using the expected monetary criterion, determine how many tandem bicycles Rolley’s should purchase.