The Rolling Hills Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of 1 day or less: Contract 1: $50 for the day Contract 2: $30 for the day plus $0.20 per mile traveled Contract 3: $1.00 per mile traveled 1. Plot separate graphs for each of the three contracts, with costs on the vertical axis and miles traveled on the horizontal axis. 2. Express each contract as a linear cost function of the form y=a+bX. 3. Identify each contract as a variable-, fixed-, or mixed-cost function. First let's draw the graph for contract 1.

The Rolling Hills Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of 1 day or less: Contract 1: $50 for the day Contract 2: $30 for the day plus $0.20 per mile traveled Contract 3: $1.00 per mile traveled 1. Plot separate graphs for each of the three contracts, with costs on the vertical axis and miles traveled on the horizontal axis. 2. Express each contract as a linear cost function of the form y=a+bX. 3. Identify each contract as a variable-, fixed-, or mixed-cost function. First let's draw the graph for contract 1.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 30P

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Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. He was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, “I don’t like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us!” Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him…
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