(3 points) Sepp\'s Ski Rental rents skis for $ 30 per day. The daily cost per se
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(3 points) Sepp's Ski Rental rents skis for $ 30 per day. The daily cost per set of skis is $ 10. It includes maintenance, storage, and overhead. Daily profits depend on daily demand for skis and the number of sets available. Sepp knows that on a typical weekend the daily demand for skis is given in the table.
Probability 0.0750.075 0.1250.125 0.4750.475 0.150.15 0.1750.175 Number of Customers 6060 6161 6262 6363 6464 (3 points) Sepp's Ski Rental rents skis for $30 per day. The daily cost per set of skis is $10. It includes maintenance, storage, and overhead. Daily profits depend on daily demand for skis and the number of sets available. Sepp knows that on a typical weekend the daily demand for skis is given in the table. 0.0750.125 0.4750.150.175 Number of Customers 6061626364 a) Find the expected number of customers: 62.225 b) If 60 sets of skis are available, compute Sepp's expected profit: 1200 c) If 61 sets of skis are available, compute Sepp's expected profit: d) If 62 sets of skis are available, compute Sepp's expected profit: e) If 63 sets of skis are available, compute Sepp's expected profit: f If 64 sets of skis are available, compute Sepp's expected profit: g) How many sets of skis should Sepp have ready for rental to maximize expected profit?Explanation / Answer
c) expected proft =expected rent -cost =30*(60*0.075+61*(1-0.075))-610=1217.75
d) expected proft =30*(60*0.075+61*0.125+62*0.8)-620=1231.75
e)expected proft =30*(60*0.075+61*0.125+62*0.475+63*0.325)-630=1231.5
f)expected proft =30*(60*0.075+61*0.125+62*0.475+63*0.15+64*0.175)-640 =1226.75
g) for maximize expected profit ; number of sets are =62
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