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Problem 4 . National Budget Airlines has just been awarded a new route between Y and Z , and will use a leased plane to
Problem National Budget Airlines has just been awarded a new route between and and will use a leased plane to fly full circuits per day daily flights There are other carriers on the route and the passenger demand is uncertain. You are in charge of considering three options to lease for this route. Planes will fly approximately hours per day for days per year. The annual lease cost includes all maintenaance and other consumables except fuel. Cost of jet fuel is estimated at $ gallon. The annual leasemaintenance cost LMC in millions, the fuel consumption rate in gallons per hour, and the seat capacity per plane are provided next.
tablePlaneLMCYGhrCapacity$$$
Assume there are three possible demand revenue scenarios:
A passengers flight and $ passengerflight.
B passengers flight and $ passengerflight.
C passengersflight and $ passengerflight.
To do
Develop a payoff table in $ Implement in Excel and have the cost of fuel as a refenced variable see XTree example where the cost per container is referenced from Cell D
Determine the decision for each model with no probabiltiy estimate optimistic conservative, minmax regret
What is the decision if the probabilities are
Create a sensitivity analysis graph for the cost of jet fuel from $ to $
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