Acadia Logistics anticipates that it will need more distribution center space to accommodate what it believes will be a significant increase in demand for its final-mile services. Acadia could either lease public warehouse space to cover all levels of demand or construct its own distribution center to meet a specified level of demand, and then use public warehousing to cover the rest. The yearly cost of building and operating its own facility, including the amortized cost of construction, is $12.00 per square foot. The yearly cost of leasing public warehouse space is $20.00 per square foot. The expected demand requirements follow: Requirements (in sq. ft) 200,000 300,000 400,000 500,000 Probability 0.4 0.3 0.2 0.1 a. Calculate the expected value of leasing public warehouse space as required by demand.b. Calculate the expected value of building a 200,000-squarefoot distribution center and leasing public warehouse space as required if demand exceeds the need for 200,000 square feet of space.c. Calculate the expected value of building a 300,000-squarefoot distribution center and leasing public warehouse space as required if demand exceeds the need for 300,000 square feet of space.d. Calculate the expected value of building a 400,000-squarefoot distribution center and leasing public warehouse space as required if demand exceeds the need for 400,000 square feet of space.e. Calculate the expected value of building a 500,000-squarefoot distribution.f. Which of the above decisions provides the minimized expected value?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Acadia Logistics anticipates that it will need more distribution center space to accommodate what it believes will be a significant increase in demand for its final-mile services. Acadia could either lease public warehouse space to cover all levels of demand or construct its own distribution center to meet a specified level of demand, and then use public warehousing to cover the rest. The yearly cost of building and operating its own facility, including the amortized cost of construction, is $12.00 per square foot. The yearly cost of leasing public warehouse space is $20.00 per square foot. The expected demand requirements follow:
| Requirements (in sq. ft) | 200,000 | 300,000 | 400,000 | 500,000 |
| Probability | 0.4 | 0.3 | 0.2 | 0.1 |
a. Calculate the
b. Calculate the expected value of building a 200,000-squarefoot distribution center and leasing public warehouse space as required if demand exceeds the need for 200,000 square feet of space.
c. Calculate the expected value of building a 300,000-squarefoot distribution center and leasing public warehouse space as required if demand exceeds the need for 300,000 square feet of space.
d. Calculate the expected value of building a 400,000-squarefoot distribution center and leasing public warehouse space as required if demand exceeds the need for 400,000 square feet of space.
e. Calculate the expected value of building a 500,000-squarefoot distribution.
f. Which of the above decisions provides the minimized expected value?
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