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I have a question on the profit table in Ex.1 of Risk and Uncertainty. Is it always the case that we first supply the quantity for the certain contract (choice) then the balance for normal (uncertain) customers? Or can it be the other way around (i.e supply normal (uncertain) customers first then the balance to the contract to reach max 1200units).
You must watch our videos on this….
If you don’t mind me saying you lack understanding on what a payoff table is and what it displays.
Here is an examplehttps://opentuition.com/acca/pm/risk-and-uncertainty-maximin-acca-performance-management-pm/
The payoff table shows the profits or contributions (depending on what the question asks for) for each combination of supply and demand.
400, 500, 700 & 900
The 1200 is just what the factory could do…You calculate the outcomes and then make the right decision depending which of the criteria you are being asked to use.
I’ve revised the profit table and I now understand that the profit table provides all profit combinations for highest normal demand/lowest contract size to lowest normal demand/highest contract size and everything in between, while making sure we don’t exceed factory capacity. It makes sense now and was a silly misunderstanding on my part. Thank you for your response.
I’ve revised the profit table and I now understand that the profit table provides all profit combinations for highest normal demand/lowest contract size to lowest normal demand/highest contract size and everything in between, while making sure we don’t exceed factory capacity. It makes sense now and was a silly misunderstanding on my part. Thank you for your response.
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