Ray is planning to open a small car-wash operation for washing just one car at a time. He must decide how much additional space to provide for waiting cars. Ray estimates that customers would arrive according to a Poisson input process with a mean rate of 1 every 4 minutes, unless the waiting area is full, in which case the arriving customers would take their cars elsewhere. The time that can be attributed to washing one car has an exponential distribution with a mean of 2 minutes. Suppose that Ray makes an average $4 per served customers. Moreover, each car space rented for waiting costs $800 per month. Ray is planning to run the car-was for 200 hours every month. 2. How much space should Ray provide for the waiting cars in order to maximize his expected net profit? (By net profit, we mean profit from car-wash operations minus the rental cost)
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Ray is planning to open a small car-wash operation for washing just one car at a time. He must decide how much additional space to provide for waiting cars. Ray estimates that customers would arrive according to a Poisson input process with a mean rate of 1 every 4 minutes, unless the waiting area is full, in which case the arriving customers would take their cars elsewhere. The time that can be attributed to washing one car has an exponential distribution with a mean of 2 minutes.
Suppose that Ray makes an average $4 per served customers. Moreover, each car space rented for waiting costs $800 per month. Ray is planning to run the car-was for 200 hours every month.
2. How much space should Ray provide for the waiting cars in order to maximize his expected net profit? (By net profit, we mean profit from car-wash operations minus the rental cost)
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