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During a recent trip to her favorite restaurant, Sandy (owner of shop 1) met Chris Talley (owner of shop 7).

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During a recent trip to her favorite restaurant, Sandy (owner of shop 1) met Chris Talley (owner of shop 7). After an enjoyable lunch, Sandy and Chris had a heated discussion about market share for the quick-oil-change operations in their city. Here is their conversation: Sandy: My operation is so superior that after someone changes oil at one of my shops, they will never do business with anyone else. On second thought, maybe 1 person out of 100 will try your shop after visiting one of my shops. In a month, I will have 99% of the market, and you will have 1% of the market.

Chris: You have it completely reversed. In a month, I will have 99% of the market, and you will only have 1% of the market. In fact, I will treat you to a meal at a restaurant of your choice if you are right.

If I am right, you will treat me to one of those big steaks at David's Steak House. Do we have a deal? Sandy: Yes! Get your checkbook or your credit card. You will have the privilege of paying for two very expensive meals at Anthony's Seafood Restaurant.

(a) Assume that Sandy is correct about customers visiting one of her quick-oil-change shops. Will she win the bet with Chris?

(b) Assume that Chris is correct about customers visiting one of his quick-oil-change shops. Will he win the bet?

(c) Describe what would happen if both Sandy and Chris are correct about customers visiting their quick-oil-change operations.


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a This is a typical Markov problem We assume the same data as presented in Problem 15 28 with the ex…View the full answer


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Quantitative Analysis for Management

Quantitative Analysis for Management

ISBN: 978-0132149112

11th Edition

Authors: Barry render, Ralph m. stair, Michael e. Hanna

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Question Details
Chapter # 15
Section: Discussion Questions
Problem: 29
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Question Posted: August 31, 2012 06:00:39
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