Forum Replies Created
- Posts
For the demand of 50 million, Option 1 is the best outcome of 4.0. If that option is chosen, then there will be no regret. Hence, the answer is 0.
But, if option 2 is chosen, SC stands to lose 4.0 plus the negative NPV of (8.0) that option 2 gives. So, SC will lose -4-8 (-12.0).
If option 3 is chosen, SC will lose 4.0 for not choosing option 1, and another 32.0. That is -4.0 -32.0 (-36.0)
60 million demand:
The best option is 2 at NPV of 16.0.
If option 2 is chosen, the regret will be 0.
If option 1 is chosen, the regret will be 16.0 -6.0 (which option 1 gives). That will give 11.0.
If option 3 is chosen, the regret will be the loss of 16.0 and another loss of 24.0 (which is the negative NPV for choosing option 3).
That will give -16.0 -24.0 = -40.0.
70 million demand
The best option is 3 at 17.0
If option 3 is chosen, there will be no regret
If option 1 is chosen, there will be a regret of 17.0 -6.0 (option NPV)
= 11.0.
If option 2 is chosen, the regret will be 17.0 – 16.0 (option 2 NPV) =1.0.
