ISPM 301 Assignment-4-Solution

ISPM 301 Assignment-4-Solution - Sarah's Movers Sarah's...

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Sarah’s Movers Sarah’s Movers rents out trucks with a crew of two on a daily basis, usually to homeowners who are moving or to companies with delivery problems. On one particular day, Sarah is a truck short and intends to rent one from another rental company. The question she faces is how big a truck should she get? A large truck costs $200 per day (including insurance, fuel, etc.) and a small truck is only $130 per day. However, if the load is too large, the crew will have to make two trips with a small truck thus offsetting the cheaper rental price. Sarah assesses the additional cost of making the extra trip (overtime and truck mileage) at $150. She assesses the probability that two trips will be necessary if she rents a small truck at 0.40. Question 1: Assuming there are no other ramifications to her decision, should Sarah’s rent a large truck or a small truck? Draw a decision tree to support your answer. Question 2: What would it be worth to Sarah to know
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This note was uploaded on 04/30/2008 for the course ISPM 301 taught by Professor 3 during the Spring '08 term at Tulane.

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ISPM 301 Assignment-4-Solution - Sarah's Movers Sarah's...

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