An oil spill has fouled 200 miles of Pacific shoreline. The oil company responsible has been given 14 days to clean up the shoreline, after which a fine will be levied in the amount of $10,000/day. The local cleanup crew can scrub five miles of beach per week at a cost of $500/day. Additional crews can be brought in at a cost of $18,000 plus $800/day for each crew.
(a) How many additional crews should be brought in to maximize the total cost to the company? (You may use the five step method). How much will the clean-up cost?
(b) Examine the sensitivity to the amount of the fine. Consider the number of days the company will take to clean up the spill and the total cost to the company.
(c) Examine the sensitivity to the amount of the fine. Consider the number of days the company will take to clean up the spill and the total cost to the company.
(d) The company has filed an appeal on the grounds that the amount of the fine is excessive. Assuming that the only purpose of the fine is to motivate the company to clean up the oil spill in a timely manner, is the fine excessive?