Question: Consider Wattos junk shop from Problem 3. The Jawas require 10 credits (non-refundable) each day they go out looking for an engine. If they are

Consider Wattos junk shop from Problem 3. The Jawas require 10 credits (non-refundable) each day they go out looking for an engine. If they are successful in finding one, Watto will pay an additional 80 credits to complete the transport of the engine to his shop. It costs him about 160 credits in spare parts to repair the engine when it comes in. Watto estimates that an angry pilot (one that is unable to find an engine in Wattos shop) costs him about 100 credits in bad publicity. Watto sells all his engines for 1000 credits each. (a) What is the probability Watto has a full inventory?

(b) What is the expected purchasing and restoration cost per day? (c) What is the expected total lost sales cost per day? (d) What is the expected gross revenue per day? (e) What is Wattos expected profit (including lost sales cost)?

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