White Valley Ski Resort is planning the ski lift operation for its new skiresort. Management is trying to determine whether one or two lifts willbe necessary: each lift can accommodate 250 people per day. Skiingnormally occurs in the 14-week period from December to April, duringwhich the lift will operate seven days per week. The first lift will operateat 90 percent capacity if economic conditions are bad, the probability ofwhich is believed to be about a 0.3. During normal times the first lift willbe utilized at 100 percent capacity, and the excess crowd will provide 50percent utilization of the second lift. The probability of normal times is0. Finally, if times are really good, the probability of which is 0.2, theutilization of the second lift will increase to 90 percent. The equivalentannual cost of installing a new lift, recognizing the time value of moneyand the lit's economic life, is $50.000. The annual cost of installing twolifts is only $90.000 if both are purchased at the same time. If used at all,each lift costs $200.000 to operate, no matter how low or high itsutilization rate. Lift tickets cost $20 per customer per day. Should theresort purchase one lift or two? Construct a decision tree.

Answered: White Valley Ski Resort is planning the…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Shoney Video Concepts produces a line of video streaming servers that are linked to personal computers for storing movies. These devices have very fast access and large storage capacity. Shoney is trying to determine a production plan for the next 12 months. The main criterion for this plan is that the employment level is to be held constant over the period. Shoney is continuing in its R&D efforts to develop new applications and prefers not to cause any adverse feelings with the local workforce. For the same reason, all employees should put in full workweeks, even if that is not the lowest-cost alternative. The forecast for the next 12 months is MONTH FORECAST DEMAND January 550 February 750 March 850 April 550 May 350 June 250 July 150 August 150 September 250 October 650 November 750 December 830 Manufacturing cost is $200 per server, equally divided between materials and labor. Inventory storage cost is $4 per unit per month and is assigned based…
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