As the Owner of a Rent-A-Car Agency You Have Determined

Essay

As the owner of a rent-a-car agency you have determined the following statistics:
The gross profit is $40 per car per day rented.When there is demand for a car when none is available there is a goodwill loss of $80 and the rental is lost.Each day a car is unused costs you $5 per car.Your firm initially has 4 cars.
$$\begin{array} { c c c c } \begin{array} { c } \text { Potential } \\\text { Rentals Daily }\end{array} & \text { Probability } & \begin{array} { c } \text { Rental } \\\text { Duration }\end{array} & \text { Probability } \\\hline 0 & .10 & 1 \text { day } & .50 \\1 & .15 & 2 \text { day } & .30 \\2 & .20 & 3 \text { days } & .15 \\3 & .30 & 4 \text { days } & .05 \\4 & .25 & &\end{array}$$ a. Conduct a 10 -day simulation of this business using Row #1 bel ow for demand and Row #2 below for rental length.



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