Question
2. Your company maintains a fleet of two planes that it leases out to its customers on a monthly basis. The demand distribution for planes
2. Your company maintains a fleet of two planes that it leases out to its customers on a monthly basis. The demand distribution for planes is as follows:
Demand (planes per month) 0, 1, 2, 3, 4
Probability x=0: 0.10, x=1: 0.25, x=2: 0.30, x=3: 0.25, x=4: 0.10
a. What is the expected demand per month? (0.5 points)
b. What is the variance of the demand per month? (0.5 points)
The fixed cost of maintaining a plane in your fleet is $100,000 per plane per month regardless of whether the plane is leased out or not. The lease revenue is $200,000 per plane per month. All additional expenses of operating a leased plane are borne by the customer. (Use this information in parts c and d of this question.)
c. What is your company's expected profit per month? (1 point)
d. What is the standard deviation of profit per month? (0.5 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started