
88 Fashion Retail Supply Chain Management
theirs are smaller; in terms of variance of payoff, which represents risk under the
mean-variance model, theirs are bigger.
2 FRSCM Information Systems Projects 2 and 3 are the mean-variance efficient
projects as they are non-inferior. To be specific, even though FRSCM Information
Systems Project 2 has a much larger expected payoff, the corresponding variance
of payoff is also larger. Thus, the fashion retailer should choose between FRSCM
Information Systems Projects 2 and 3.
3 Suppose that the fashion retailer has an expected payoff target in terms of net
present value of 2 million dollars. Then, since between ...