Conduct sensitivity analysis

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Joe Biggs owns an ice cream truck and lives 30 miles from a beach resort. The sale of his products is highly dependent on his location and the weather. At the resort, his profit will be $120/day in fair weather and $10/day in bad weather. At home, his profit will be $70/day in fair weather and $55 in bad weather. Assume on any particular day, the weather service suggests a 40% chance of bad weather.

Conduct a sensitivity analysis. What is the value of the probability of fair weather above which locating at the resort is the preferred alternative? (3 decimals)

Reference no: EM132212740

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