The Pilsdorff Beer Company runs a fleet of trucks along the 100 mile road from Hangtown to

Question:

The Pilsdorff Beer Company runs a fleet of trucks along the 100 mile road from Hangtown to Dry Gulch. The trucks are old, and are apt to break down at any point along the road with equal probability. Where should the company locate a garage so as to minimize the expected distance from a typical breakdown to the garage? In other words, if X is a random variable giving the location of the breakdown, measured, say, from Hangtown, and b gives the location of the garage, what choice of b minimizes E (|X −b|)? Now suppose X is not distributed uniformly over [0, 100], but instead has density function FX(x) = 2x/10,000. Then what choice of b minimizes E (|X − b|)? 

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Management Principles and Applications

ISBN: 978-0133423822

12th edition

Authors: Sheridan Titman, Arthur Keown, John Martin

Question Posted: