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•
Problem 1 (20 points)
The owner of Luxury Cars 51 collected the following statistics:
PotentialRentals Daily
Probability
0
0.10
1
0.17
2
0.20
3
0.28
4
0.25
RentalDuration
1 day
0.48
2 days
0.30
3 days
0.15
4 days
0.07
The gross profit is $39 per car per day rented. When there is demand for a car but none is available, there is an opportunity loss of $82. Each day a car is unused costs you $16 per car. Luxury Cars 51 initially has four cars.
Conduct a 10-day simulation of this business and determine the profit (repeat the 10-day simulation 100 times)
If your firm can obtain another car for $200 for 10 days, should you take the extra car?
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