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PLEASE ANSWER PART C, THE EXPECTED VALUE FOR 20 SERVERS AND 30 SERVER TOO. After graduating from college, your friends and you start an Internet
PLEASE ANSWER PART C, THE EXPECTED VALUE FOR 20 SERVERS AND 30 SERVER TOO.
After graduating from college, your friends and you start an Internet auction service called TriangCom. Business has been fantastic, with 10 million customer visits - or "hits" to the site in the past year. You have several capacity decisions to consider. One key decision involves the number of computer servers needed. You are considering putting in 10, 20, or 30 servers. TriangCom generated $4.5 million last year, based on 10 million hits. Put another way, each hit generated, on average, $0.45 in revenue. Click the icon to view the costs and capacity limits. Click the icon to view the demand scenarios developed by marketing. a. The break-even point for the capacity of 10 servers is 171625 hits. (Enter your response rounded up to the next whole number.) The break-even point for the capacity of 20 servers is 237020 hits. (Enter your response rounded up to the next whole number.) The break-even point for the capacity of 30 servers is 381166 hits. (Enter your response rounded up to the next whole number.) b. The indifference point for having 10 servers and having 20 servers options is 5000000 hits. (Enter your response rounded to the nearest whole number.) c. Calculate the expected value for each capacity alternative. (Hint: Don't forget about capacity constraints that can limit the number of hits each capacity alternative can handle.) Fill in the table below (enter your responses as whole numbers). Option 10 servers 20 servers Expected Value $ 12925750 Number of Fixed Cost per Variable Cost Servers Year per Hit $75,000 $0.013 $ 105,000 $0.007 $170,000 $0.004 Maximum Hits per Year 35 million 45 million 65 million Yearly Demand 20 million hits 45 million hits 65 million hits Probability 35% 55% 10%Step by Step Solution
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