The Islander Fishing Company purchases clams for $1.50 per pound from Peconic Bay fishermen and sells them to various New York restaurants for $2.50 per pound. Any clams not sold to the restaurants by the end of the week can be sold to a local soup company for $0.50 per pound. The company can purchase 500, 1,000 or 2,000 pounds.

1.Complete the following payoff table.

2. Using the Maximax approach, determine how many pounds of clams the Islander Fishing Company should purchase.

3. What is the opportunity loss for purchasing 500 pounds of clams when demand is for 1,000 pounds of clams?.

4. What is the opportunity loss for purchasing 2,000 pounds of clams when demand is for 500 pounds of clams?.

5. Using the Hurwicz approach (v = .30), determine how many pounds of clams the Islander Fishing Company should purchase..

6. Compute the expected value (EMV) for each purchase level..What is the optimal number of pounds of clams the company should purchase?

7. Determine the maximum amount of money that should be spent to determine exactly which demand level will occur (EVPI)