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46
1. Introduction and Examples
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While weather effects do no~ vary greatly over 25year periods, fire
damage can be quite variable. Assume that in each 25year block, the
probability is 1/3 that
15%of all timber stands are destroyed and that
the probability is 2/3 that 5% is lost. Suppose that discount rates are
completely overcome by increasing timber
value so that
all harvests
in the 100year period have the same current value. Revenue is then
proportional
to the total wood yield.
6. A hospital emergency room is trying to plan holiday weekend staffing
for a Saturday, Sunday, and Monday. Regulartime
nurses can work
any two days of the weekendat a rate of $300per day. In general,
.
a nurse can handle
10 patients
during
a shift. The demand
is not
known, however. If more patients
arrive than
the
capacity
of the
regulartime
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 Fall '08
 Linderoth
 Optimization

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