A department store is considering providing valet parking for its customers at a flat rate of $10,

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A department store is considering providing valet parking for its customers at a flat rate of $10, regardless of how long the customer shops in the store. Valet operators will park cars in a special area in an adjacent parking garage. The department store must contract with the parking garage for a designated number of parking spaces. The contract cost for a space is $5. If the number of customers desiring valet parking exceeds the number of contracted spaces, the cars will be parked in the parking garage at a cost of $15 per car. If arrivals for valet parking are Poisson distributed at a rate of 60 per hour and the time required to park in the garage is normally distributed with a mean of 45 minutes and standard deviation of 15 minutes, how many spaces in the parking garage should the department store contract for in order to maximize expected profit? What is the number if all the department store wants to do is break even?

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Facilities Planning

ISBN: 9780470444047

4th Edition

Authors: James A. Tompkins, John A. White, Yavuz A. Bozer, J. M. A. Tanchoco

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