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Hello Sir, hope you are doing well.
Sir I’m unable to decide as to when to make the Payoff Table and when to not.
Because in the study text of B.P.P there is a question, where i have simply used the formula of expected value to get the answer (which is obviously wrong).
While the answer has been provided by making a Pay-off table and then applying the concept of Expected Value on your figures.
Sir is there any way through which we can decide, as to when to simply apply the expected value formula and when to make a pay-off table and then use the concept of expected value on those value.
Sir the following is the question. (I’m not looking for the answer for this question as it has been provided in the study text) (Rather I’m looking to know how to decide whether we need to make Pay-off Table or not).
IB Newsagents stocks a weekly lifestyle magazine. The owner buys the magazines at the beginning of each week for $0.30 each and sells them at the retail price of $0.50 each.
At the end of the week unsold magazines are obsolete and have no value, so they are discarded as
recycled waste. The estimated probability distribution for weekly demand is shown below.Weekly demand units and their probabilities.
20 units (0.22) 30 units (0.55) and 40 units (0.25).
The actual demand in each week does not affect the actual demand in the following week.Required
If the owner is to order a fixed quantity of magazines per week, how many should that be?
Since the outcomes occur every week, many times over, the EV decision rule is considered appropriate here.Assume no seasonal variations in demand.
I am not going to comment on what is in the study text. My lectures are sufficient and you should be trying questions in the Revision Kit. It is always clear in exam questions what is needed to be done.
Sir i have watched your all lectures, i was able to understand and draft the decision tree question. Which even included the imperfect information.
However when I’m trying to solve B.P.P and Kaplan questions using same approach they seems be completely different (for imperfect information).
They have provided a very limited information for probabilities and have calculated the same using another table, unlike your way.The technical article has mentioned to go through the example of Imperfect information.
Can you please help me out what should i do
I do not have the Study Text and it sounds to me as if they are making it more complicated than is needed.
If you have an example in the Revision Kit marked as being from a past exam paper that is causing your problems then tell me which question and I will explain.
Sir i know that you suggest to attempt the kit after your video lectures.
How ever the article has suggested to go through the study text to understand the working of Imperfect information.
So it’s in the study text. Will it be okay if i post the question.
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