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An air lightcargo company (Company 1) has hangars in two airports, Airport A and Airport B. Every day exactly one order is placed. This order
An air lightcargo company (Company 1) has hangars in two airports, Airport A and Airport B. Every day exactly one order is placed. This order can require a cargo plane to be dispatched from Airport A or Airport B (with equal probability), and require it to return to Airport A or Airport B (also with equal probability). If an order is placed and no planes are available at the airport, the company pays a subsidiary company (Company 2) to do the job for $20, 000, and their planes remain where they are for the day. On every other day the air cargo company (Company 1) makes a profit of $10, 000. Company 1 has k planes. (a) How much, on average, will Company 1 need to pay Company 2 in one year (365 days)? solution to this question has been requested by another student. It will be ready shortly. (4 marks) (b) How many planes should the company have to break even on average? What is the expected prot if the company decides to lease an extra plane for $0.5 million
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