Daily random demand for vehicles

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Reference no: EM133036225

The Padrosa company rents its vehicles to the public at a rate of €120 per day; each contract lasts for exactly one day.

In turn, the manager of the company hires the vehicles from a wholesaling company. The wholesaler is responsible for the maintenance costs of each vehicle hired by Padrosa, S.A.

Every day, Padrosa's manager faces the problem of deciding how many vehicles he should hire to meet the following week's demand. If demand is lower than the number of vehicles available, the manager loses the rental of €80 for each one hired that he himself was not able to rent out. If demand is greater than the number of vehicles available, the manager loses out on a profit of €40 for each one that was not available.

Padrosa's manager has the following probability distribution for the daily random demand for his vehicles:

n

P (D=n)

25

0,11

26

0,16

27

0,26

28

0,22

29

0,13

30

0,08

31

0,04

How many vehicles he should hire to meet the following week's demand?

Reference no: EM133036225

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