Tube Country rents circular rubber rafts that its customers use to float down the Ichituckni River. Tube Country owns a fleet of 200 rafts, each of which is returned on the same day it is rented, and each raft can only be rented once during a business day. Rough water along the Ichituckni River often causes rafts to become scratched and leak air, so the staff at Tube Country is constantly repairing rafts before their next rental. As a result, Tube Country estimates that 5% of its rental fleet is unavail- able for rent at any given time. Tube Country rents rafts for $5 each, and incurs $1.00 in variable costs with each raft rental. Tube Country must also pay $20,000 in fixed business costs annually.

a. What is the daily effective capacity of Tube Country's fleet?

b. The issue of rough water creating the need for continual repairs can best be described as what?

c. Suppose Tube Country rents 100 rafts on a certain day. What is the utilization of Tube Country's raft fleet?

d. How many rentals does Tube Country need to break even each year?

e. How many rentals does Tube Country need to make in a year to earn $5,000 in profit?

f. Last year, the owner of Tube Country, Mr. Robert "Bobber" Gowdy, had the opportunity to acquire an additional 200 rafts for his rental fleet, when a compet- ing raft rental company went out of business. Instead, Bobber Gowdy decided to keep his fleet at its original size of 200.

"Even though we often rent every raft on a busy day," he said, "it wouldn't have been worth it, increasing the fleet size to 400.

If you have any more than 200 rafts rented, you can't fit all of your rafts on the truck when you are collecting them back from the Ichituckni River. That means you then have to make multiple trips to the river. This costs more and takes more time, and the folks who run Ichituckni River State Park also charge you penalties for leaving your rafts around. Basically, if you get greedy and rent more than 200 rafts, you'll actually wind up making a lot less money." What Bob- ber Gowdy has just explained can best be described as what? g. This year, Ichituckni River State Park has become concerned that too many peo- ple are floating down the river, scaring the wildlife. Bobber Gowdy has heard a rumor that Tube Country may be restricted to no more than 2,500 raft rentals annually. What is the minimum that Tube Country can charge for a raft rental and still break even if Tube Country rents exactly 2,500 rafts each year?