DSYou are a fruit vendor in the Coronation Market in Kingston Jamaica. You are facing the decision to purchase 100, 120 or 130 bags of oranges forresale each week. However, you are not sure of the demand-per week. You also consider that you can move around the market, depending on thenumber of bags, selling for different prices you have and you can also sell surplus for a reduced price. The payoff table below gives the details ofthe possible profit for each of these combinations. What is the optimal decision, using the Maximin criterion?Payoff TableProfits($)Weekly Demand (State ofNature)AverageDecision(Purchase)BelowRobustPar75000900001100005000055000100 Bags120 Bags130 Bags65000750004500065000Select one:O a. Purchase 100 bags (expected profit = $50,000)O b. Purchase 120 bags (expected profit = $65,000)O c. Purchase 130 bags (expected profit = $45,000)o d. Purchase 130 bags (expected profit = $65,000)9:25 AMCa ) ENG12/16/202185°F

The maximin rule concerns choosing the option that maximizes the lowest or minimum pay-off possible.…

Answered: You are a fruit vendor in the…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter7: Nonlinear Optimization Models

Section7.3: Pricing Models

Problem 9P

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