Chap 9 WE

# Chap 9 WE - Worked Examples for Chapter 9 Example for...

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The number of arcs on the path chosen from the origin to the destination indicates how many times Sarah will purchase and trade in a car. For example, consider the path This corresponds to purchasing a car now, then trading it in at the end of year 1 to purchase a second car, then trading in the second car at the end of year 3 to purchase a third car, and then trading in this third car at the end of year 4. Since Sarah wants to minimize her total net cost from now (node 0) to the end of year 4 (node 4), each arc length needs to measure the net cost of that arc's cycle of purchasing, maintaining, and trading in a car. Therefore, Arc length = purchase price + operating and maintenance costs - trade-in value. For example, consider the arc from node 1 to node 3. This arc corresponds to purchasing a car at the end of year 1, operating and maintaining it during ownership years 1 and 2, and then trading it in at the end of ownership year 2. Consequently, Length of arc from   1 3 to = 12,000 + 2,000 + 3,000 - 6,500 = 10,500 (in dollars).
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