Watto's junk shop in Mos Espa can keep at most 2 podracing engines in inventory at a time. The number of podracing pilots (N) coming into his shop on a daily basis follows the pmf {0.5, n= 0
P(N= n)= { 0.4, n =1
{0.1, n=2
At the beginning of the day, if Watto has less than a full inventory, he will contract some Jawas to scavenge the desert for a podracing engine he can repair and sell. On any given day, the Jawas are successful at locating an engine 35% of the time. If the Jawas were successful, they will bring Watto the engine that night after he closes his shop. They can only bring him at most one engine per day. Create a DTMC to model his daily inventory levels
Consider Watto's junk shop from above
The Jawas require 10 credits (non-refundable) each day they go out looking for an engine. If they are successful in finding one, Watto will pay transport of the engine to his shop. It costs him about 160 credits in spare parts to repair the engine when it comes in. Watto estimates that an angry pilot (one that is unable to find an engine in Watto's shop) costs him about 100 credits in bad publicity. Watto sells all his engines for 1000 credits each. an additional 80 credits to complete the
(a) What is the probability Watto has a full inventory?
(b) What is the expected purchasing and restoration cost per day?
(c) What is the expected total lost sales cost per day?
(d) What is the expected gross revenue per day?
(e) What is Watto's expected profit (including lost sales cost)?