A small tourist resort has a weekend traffi c problem and is considering whether or not to
Question:
A small tourist resort has a weekend traffi c problem and is considering whether or not to provide emergency services to help mitigate the congestion that results from an accident or breakdown. Past records show that the probability of a breakdown or an accident on any given day of a four-day weekend is 0.25. The cost to the community caused by congestion resulting from an accident or breakdown is as follows:
• A weekend with 1 accident day costs £20,000;
• A weekend with 2 accident days costs £30,000;
• A weekend with 3 accident days costs £60,000;
• A weekend with 4 accident days costs £125,000.
As part of its contingency planning, the resort needs to know:
(a) The probability that a weekend will have no accidents
(b) The probability that a weekend will have at least two accidents
(c) The expected cost that the community will have to bear for an average weekend period
(d) Whether or not to accept a tender from a private firm for emergency services of £20,000 for each weekend during the season.
Step by Step Answer: