Scribd
Upload
32 views2 pages

Demand

The document presents an incremental decision problem showing the demand probability, cumulative probability, incremental decision, probability the incremental unit is or is not needed, incremental expected contribution, and cumulative expected contribution for demands of 5 to 10 units. It then calculates the expected monetary value, profit, and critical ratio for the decision problem. The cumulative probability graph is also presented to visualize the cumulative probabilities as demand increases.

Uploaded by

syedwajihuddin
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
32 views2 pages

Demand

The document presents an incremental decision problem showing the demand probability, cumulative probability, incremental decision, probability the incremental unit is or is not needed, incremental expected contribution, and cumulative expected contribution for demands of 5 to 10 units. It then calculates the expected monetary value, profit, and critical ratio for the decision problem. The cumulative probability graph is also presented to visualize the cumulative probabilities as demand increases.

Uploaded by

syedwajihuddin
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Demand Prob. Cumulative Incremental Prob. That Prob.

That Incremental Cumulative


Probability Decision incremental unit incremental unit Expected Expected
not needed needed Contribution Contribution
5 .10 .10
6 .20 .30 First .10 .90 80 80
7 .25 .55 Second .30 .70 60 140
8 .20 .75 Third .55 .45 35 175
9 .20 .95 Fourth .75 .25 15 190
10 .05 1.0 Fifth .95 .05 (5) 185

Gain 90
Loss 10

Revenue=EMV=190

Profit = Gain X Prob of Gain+(-Loss) X (Prob of Loss)


= 90*.90 + (-10)*(.10)
=80

Cr= g/g+n
=90/90+10
=0.9.

Decision Problem
90 200
80 180
70 160
60 140
Inremental
50 120
Cumulative
Axis Title 40 100
30 80
20 60
10 40
0 20
1 2 3 4 5 10
-10 0
Cumugram

1
0.9
0.8
Cumulative Probabilty

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
5 6 7 8 9 10

You might also like