A weekend traffic problem during the summer season

Reference no: EM131064367

A small tourist resort has a weekend traffic problem during the summer season and is considering whether to provide emergency services to help mitigate the congestion that results from an accident or breakdown. Past records show that the probability of a breakdown or an accident on any given day of a four day weekend during the summer season is 0.25. The cost to the community caused by congestion resulting from an accident or break down are as follows:

? a weekend with 1 accident day costs £20 000
? a weekend with 2 accident days costs £30 000
? a weekend with 3 accident days costs £60 000
? a weekend with 4 accident days costs £125 000

As part of its contingency planning, the resort needs to know:

i) The probability that a weekend will have no accidents;
ii) The probability that a weekend will have at least two accidents;
iii) The expected cost that the community will have to pay for an average weekend period;
iv) Whether or not to accept a tender from a private firm for emergency services of £20 000 for each weekend during the season.

Reference no: EM131064367

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