--%>

Computing Average revenue using Standard deviation

Can anyone help me in the illustrated problem? The airport branch of a car rental company maintains a fleet of 50 SUVs. The inter-arrival time between the requests for an SUV is 2.4 hrs, on an average, with a standard deviation of 2.4 hrs. There is no indication of a systematic arrival pattern over the course of a day. Suppose that, if all SUVs are rented, then customers are willing to wait until there is an SUV available. The SUV is rented, on an average, for 3 days, with a standard deviation of one day.

a. Determine the average number of SUVs parked in the company’s lot?

b. By using a marketing survey, the company has discovered that if it decreases its daily rental price of $80 by $25, the average demand would rise to 12 rental requests per day and the average rental duration will become 4 days. Supposing that the standard deviation values stay unchanged, should this company adopt this latest pricing policy? Give an analysis!

c. Determine the average time a customer has to wait to rent an SUV? Please employ the initial parameters instead of the information in (b).

d. How would the waiting time change when the company decides to limit all the SUV rentals to exactly 4 days? Suppose that if such a restriction is imposed, the average inter-arrival time will rise to 3 hours, with the standard deviation changing to 3 hrs.

E

Expert

Verified

a) We know that a = 2.4 hours, p = 24 x 3 = 72 hours, CVa = (2.4/2.4) = 1, CVp = (24/72) = 0.33, and m = 50 cars

Percentage of cars used = (1/a)/(m/p) = (1/2.4)/(50/72) = 60%

Therefore, cars in use = 50 x 0.6 = 30

So, cars in parking lot = 20

b) a = 2, p = 96 hours,

Therefore, Percentage of cars used = (1/a)/ (m/p) = (1/2)/ (50/96) = 96%

So, average number of cars used = 50 x 0.96 = 48

Average revenue initially = 80 x 30 = $2400
Average revenue now = 48 x 55 = $2640

Therefore, the company should take the proposed step.

c) a = 2.4 hours, p = 24 x 3 = 72 hours, CVa = (2.4/2.4) = 1, CVp = (24/72) = 0.33, and m = 50 cars,

Waiting time = (p/m)(u^[{2(m+1)}1/2 – 1]/1-u)[CVa2 + CVp2/2]

= (72/50) (0.6^ {(102)1/2 – 1}/0.4) (1 + (0.33)2/2)

= 1.44 x (0.6) ^9 x 0.55/0.4 = 0.02 hours = 1.2 minutes

d) a = 3 hours, p = 24 x 4 =96 hours, CVa = (3/3) = 1, CVp = (24/96) = 0.25, and m = 50 cars

Percentage of cars used
= (1/a)/(m/p) = (1/3)/(50/96) = 64%

Waiting time = (p/m) (u^ [{2(m+1)}1/2 – 1]/1-u) [CVa2 + CVp2/2]

= (96/50) (0.64^ {(102)1/2 – 1}/0.36) (1 + (0.25)2/2)

= 1.92 x (0.64) ^9 x 0.53/0.36 = 0.05 hours = 3 minutes

   Related Questions in Basic Statistics

  • Q : Simplified demonstration of Littles Law

    Simplified demonstration of Little’s Law:

    Q : How to solve statistics assignment in

    How to solve staistics assignment, i need some help in solving stats assignment on AVOVA based problems. Could you help in solving this?

  • Q : FIN512 Entrepreneurial Finance Chapter

      Chapter 6: Discussion Question: #4 p. 223  It is usually easier to forecast sales for a seasoned firm contrast to an early-stage venture because an early-stage venture has limited access to bank credit lines, sho

  • Q : Statistics basic question This week you

    This week you will analyze if women drink more sodas than men.  For the purposes of this Question, assume that in the past there has been no difference.  However, you have seen lots of women drinking sodas the past few months.  You will perform a hypothesis test to determine if women now drink more

  • Q : Principles of data analysis For the

    For the data analysis project, you will address some questions that interest you with the statistical methodology we are learning in class. You choose the questions; you decide how to collect data; you do the analyses. The questions can address almost any topic,

  • Q : Calculate the p- value Medical tests

    Medical tests were conducted to learn about drug-resistant tuberculosis. Of 284 cases tested in New Jersey, 18 were found to be drug- resistant. Of 536 cases tested in Texas, 10 were found to be drugresistant. Do these data indicate that New Jersey has a statisti

  • Q : Quantities in a queuing system

    Quantities in a queuing system: A: Count of

  • Q : Model Checking Approach Model Checking

    Model Checking Approach: • Specify program model and exhaustively evaluate that model against a speci?cation        –Check that properties hold   

  • Q : Use the NW corner rule to find an

      (a) Use the NW corner rule to find an initial BFS, then solve using the transportation simplex method. Indicate your optimal objective function value. (b) Suppose we increase s1 from 15 to 16, and d3 from 10 to 11. S

  • Q : Statics for each of the following

    for each of the following studies a and b decide whether to reject the null hypothesis that groiups come from identical populations. Use the .01 level. (c) Figure the effects size for each study. (d) ADVANCED TOPIC: Carry out an analysis of variance for study (a) using the strucurtal method.