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Hi John,
the solution of BPP revision kit Q98 is I think different from what you taught us from the lecture.
In your way, the answer should have been C $600, but the solution says the answer is A $425.
I got it wrong on Question 103 as well, because I followed the same principle that I understood from your lecture.
Should I follow the book or maybe your rule is the same as the book but I half learnt the rule? I am not sure.
Looking forward to hearing from you.
Regards.
The BPP answer does it exactly the same way as I do in my lecture, and their answer is correct.
Remember, then you look at each of the variable items in turn, and in each case determine the regrets for each of the courses of action.
Here, the uncertain items are the variable costs which are the rows and the choice items are the prices which are the columns. So they have given the table the other way round from the way I show it, which is what may be confusing you – it doesn’t matter which way round the table it.
You look at each uncertain item in turn (so each of the variable costs in turn) and for each of the choice (so each selling price) you decide which would have been best and what the opportunity cost would be of choosing one of the other selling prices.
Thank you very much sir for the quick reply. now I understand. However, the way the solution is done is still different between the two questions of Q98 and Q103.
Q 98 just simply picked the highest number among the figures of each choice on the regret table, while Question 103 added all the figures of each choice on regret table, and the final figure they chose was the one minimises the maximum regret, if it had been done the same way as you or question 98, the figures used for minimax regret should have been “675000 for supply 350,000”, “360000 for supply 280000”, “750000 for supply 200000”, instead of the figure of 990, 710, 1150..??
either way it gives the same answer in this case, however, if it was not a multiple choice question, I would have got the figures completely wrong.
so should I stick to what I know or should I learn the rule used on question 103?
Hope to hearing from you sir.
BPP’s answer to question 103 is complete nonsense.
They have got the regret table correct, but it is completely wrong to then add them up.
As you have written, they do end up with the correct answer (B) but only by coincidence.
(The examiner knows how to do it properly, and does not make mistakes like this, so don’t worry there!)
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