BPP Revision kit BDU CO. MINIMAX REGRET DECISION

EEkta6y ago

MY TABLE IS AS FOLLOWS: 425 500 600 0 0 0 40000 29200 16800 90000 65700 3780 425-90000 500-65700 600-16800 SO THE ANSWER IS 600 why is the answer 425 in the kit

John MoffatTutor6y ago#1

You have prepared your regret table wrongly. When prepared the regret table, we look at each of the uncertain items (in this case the variable cost) and compare the contributions we would get from each of the choices available to us (in this case the selling price). So, for example, if the variable cost turns out to be $170, then the best course of action would be to have a selling price of $425 in which case there would be 0 regret. If on the other hand we had chosen a selling price of $500 then we would only get 240,900 as against 255,000 and so there is regret of the difference of 14,100. If we had chosen a selling price of $600 then we would only get 180,600 as against a possible 255,000 and so there is regret of the difference of 74,400. Have you watched my free lectures on this?

EEkta6y ago#2

Got it.thanks sir.

John MoffatTutor6y ago#3

You are welcome :-)