The operations manager of a national auto rental company must determine the size of the...
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The operations manager of a national auto rental company must determine the size of the fleet to purchase each year, and she must allocate that fleet among the company's rental locations. Each car that she purchases incurs a fixed charge of $4000 per year. The demand for cars varies with the location, as does the contribution. Part 1 0.0/7.5 points (graded) Cars are rented for one day. The daily demand at a particular location is Poisson with a mean of 60. Demands on different days are independent, with the same distribution. The revenue at that location is $30 per car rented. How many cars should be located there? (Assume 365 days per year) What is the company's expected profit from car rental at that location? Hint: The expected profit P (Q) when we order items is given by: P(Q) = E[(r c) min[Q, d] - (c - s) max [0, Q -d]]in which r is the revenue per day, c is the cost per day, and s is the salvage value per day, d is the demand. P(Q) can also be Revenue-Cost: P(Q) = E[Revenue] - Cost
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