Question

A businessman bought a dealership that is incurring a loss of $500,000 a year. He decided to strategize in order to turn the business around. In addition to the $500,000 annual loss, his fixed cost for running the dealership on a monthly basis is $5,000. The number of cars sold per week and their probabilities mimic the outcomes of three coins being flipped. The number of cars sold in a week was observed to be the same as the number of tails that appear in a three coin flip. See the distribution:


Number of Tails 0 |1 |2 |3
probablity 1/8 | 3/8 | 3/8 | 1/8

Answer 1

Given that there are 52 weeks in a year, what is the expected revenue per car (rounded to the nearest dollar) that has to be made in order to break even in the first year?

Answer 2

A.
$4,308




B.
$7,179




C.
$5,385




D.
$10,769




E.
$3,590

Answer 3

@amistre64

Answer 4

@amistre64

Answer 5

5000*12 = 60 000 for the year, add in the loss we get

560 000 that needs to be covered in a year; divided by 52 gives a weekly breakeven amount of say: 10 770
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the expected probability i believe is a weighted average.\[0(1/8)+1(3/8)+2(3/8)+3(1/8)=12/8=1.5\]
so he should expect to sell 1.5 cars on average per week.

10770/1.5 = 7180 per car

Answer 6

but thats just an idea, i cant verify it tho :/