Crazy Joe runs a tube rental on Ohio River. He currently leases tubes from a dealer in
Question:
Crazy Joe runs a tube rental on Ohio River. He currently leases tubes from a dealer in Pittsburgh at a cost of $35 per tube per day. On Saturdays, he picks up the tubes and drives to a launching point on the river, where he rents tubes to white-water enthusiasts for $45 per tube per day. Crazy Joe records the Saturday demand for tubes and finds the demand distribution.
Suppose that Joe already knows that holding 12 units is better (more profitable) than holding 11 units on hand. Now, he is wondering if he needs to add an extra tube to make the total number of tubes equal to 13. What is the expected benefit associated with this extra tube (13th tube) he adds?
Service Management Operations Strategy Information Technology
ISBN: 978-0077841201
8th edition
Authors: James Fitzsimmons, Mona Fitzsimmons, Sanjeev Bordoloi