Green Thumb Garden Supply orders plants to sell to its
customers. Each plant costs $23 to purchase and another $15 to grow
and feed for the season. The plants will be sold for $65 a piece.
Once the season is over, the remaining plants will be sold for just
$25. The company estimates demand for the plants in the table
below.
Demand: 22, 23, 24, 25, 26
Probability: 0.15, 0.25, 0.25, 0.2, 0.10
Please perform the following tasks:
1) Generate a payoff table, and compute the expected value for
each alternative.
2) What is the expected value for perfect information?
3) How many plants should the garden supply company
purchase?