Discuss the below:
Q: As the owner of a rent-a-car agency you have determined the following statistics:
Potential Rentals Daily Probability Rental Duration Probability
0 .10 1 day .50
1 .15 2 day .30
2 .20 3 days .15
3 .30 4 days .05
4 .25
The gross profit is $40 per car per day rented. When there is demand for a car when none is available there is a goodwill loss of $80 and the rental is lost. Each day a car is unused costs you $5 per car. Your firm initially has 4 cars.
a. Conduct a 10-day simulation of this business using Row #1 below for demand and Row #2 below for rental length.
Row#1: 63, 88, 55, 46, 55, 69, 13, 17, 36, 81
Row #2: 59, 09, 57, 87, 07, 92, 29, 28, 64, 36
If your firm can obtain another car for $200 for 10 days, should you take the extra car?
Run a 50-day simulation using Excel. Please attach your Excel file.