Owned and operated by Ricardo, RDMflics DVD rental store currently has 7 DVD cop

Question

Owned and operated by Ricardo, RDMflics DVD rental store currently has 7 DVD copies of "All My Ninja Children." There are, on average, 6 customers per day requesting this DVD. These requests arrive uniformly throughout the 24 hour the store is open. The coefficient of variation of the arrival of customer request is 1.0. RDMflics charges $4.00 per DVD per day. Customers keep their DVDs, on average, for 24 hours with a standard deviation of 10 hours. (Hint: The servers are the DVDs.)

RDMflics is contemplating to reduce the rental fee from $4.00 per DVD per day to $3.80 per DVD per day. Market survey shows the average number of customers per day requesting the All My Ninja Children DVD increases to 8. Suppose customers are willing to wait if all copies of the movie are rented out. If we round up to the nearest dollar, what is the change in daily rental sales?

a. It is $3 more after the fee reduction.

b. It is $3 less after the fee reduction.

c. It is $6 more after the fee reduction.

d. It is $6 less after the fee reduction.

e. The revenue is unchanged.

Explanation / Answer

Average revenue is expected to increase.

Now the revenue will be 7*3.8-6*4 = 2.6

Revenue should be 3 more after fee reduction.

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.