Question
Sara has graduated from HS and her parents have given her a car fund of $21,000 to help purchase and maintain a 3 year old
Sara has graduated from HS and her parents have given her a car fund of $21,000 to help purchase and maintain a 3 year old car in college. Because of maintenance costs, her parents tell her that she may trade in her car for another 3 year old car (at a cost of $12000), one or more times during the next 3 summers if she determines that it will minimize her overall costs. They also tell her that in 4 years they will buy her a new car as a college graduation present so she should definitely plan on trading in the car then. Yearly operational and maintenance cost are provided below. Formulate the problem as a minimum flow network problem and then solve it using excel.
Operating and Maintenance Costs for Ownership Year | Trade in Values at End of Ownership Year | |||||||
Car Purchase Price | 1 | 2 | 3 | 4 | 1 | 2 | 3 | 4 |
$12,000 | $2000 | $3000 | $4500 | $6500 | $8500 | $6500 | $4500 | $3000 |
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