Should you take extra car

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Reference no: EM1374958

Q. As owner of a rent-a-car agency you have determined subsequent statistics: Potential Rentals Daily Probability Rental Duration Probability

0 .10 1 day .50
1 .15 2 day .30
2 .20 3 days .15
3 .30 4 days .05
4 .25

Gross profit is $40 per car per day rented. When re is demand for a car when n1 is available re is a goodwill loss of $80 and rental is lost. Each day a car is unused costs you $5 per car.

Your industry initially has 4 cars.

a. Conduct a 10-day simulation of this business

b. If your industry can obtain another car for $200 for 10 days, should you take extra car?

Reference no: EM1374958

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