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Decision Making at Coffee Planet- Expected Payoffs

Coffee Planet is considering selling juices along with its other products.

States of Nature

High Sales Med sales Low Sales

A(0.2) B(0.5) C(0.3)

A1 (sell juices) 3000 2000 -6000
A2 (don't sell juices) 0 0 0

The probabilites shown above represent the states of nature and the decision maker's (e.g.,manager) degree of uncertainties and personal judgement on the occurence of each state. What is the expected payoff for actions A1 and A2 above? What would be your recommendation?

Solution Summary

The solution provides answers to questions on the use of probability in decision making related to Coffee Planet