Numericals on EMV Criterion and EOL Criterion

1.         Given the following conditional cost matrix corresponding to 3 Acts  A₁, A₂ and A₃ and 3 states of nature find best action to minimize cost :

(i)      Using EMV criterion               (ii)        Using EOL criterion.

(Ans. : Minimum Cost using EMV = ` 1950, using EOL = ` 1575)

2.         Given the following pay off matrix with probabilities of states of nature.

(i)      Find expected pay – off of each action.

(ii)     Find expected opportunity loss of each Act.

Ans.   

3.         Given following pay – off table find EMV and EOL of each actions. If Probabilities of occurrence of S₁, S₂, S₃, S₄ are 0.1, 0.3 and 0.4 respectively.

Ans.   

4.         The demand for a seasonal item on any given day are given below :

The items are perishable it they are sold on same day it gives. Profit of ` 50 per item other wise loss of ` 20 per item. Find pay off matrix. Use probability distribution of demand to find EMV of each act.

Ans.

5.         A news paper distributor assigns probabilities to the demand for a magazine as follows :

A copy of the magazine sells for ` 14/- and costs ` 12. What can be maximum possible EMV if the distributor can return unsold copies for ` 10 each.

(Ans. Keep 20 copies)

6.         A vegetable vendor purchases fruits every morning at ` 50 a box and sells for ` 80 box. Any box remaining unsold at the end of the day can be disposed at next day at salvage value of ` 20 per box. Using past sales the vendor has following frequency distribution.

            How many boxes the vendor should purchase to maximize EMV? (Ans. : 17 boxes)