Warehouse needs pest treatment

Assignment Help Business Economics

Reference no: EM131391757

A warehouse needs pest treatment that requires opening all the windows and covering the building with a tent for 48 hours. Opening the windows means deactivating the alarm system. The warehouse owner is concerned about theft during this time. He has insurance to cover losses due to theft, but the policy has a large deductible. He is thinking of hiring a security firm to provide on-site guards during the 48 hours the security system is off. The following information applies:

Insurance deductible: $25,000

Cost of on-site guards: $150/hour

Probability of theft during the 48-hour period if unguarded and without an alarm system: 30%

Probability of theft if on-site guards are present: 3%

Assume that if a theft occurs, the total amount stolen will exceed $25,000. Construct a decision tree that determines whether guards should be hired or not based only the expected monetary value.

Reference no: EM131391757

Questions Cloud

Find the equilibrium level of interest rate : Find the equilibrium level of interest rate. Find the equilibrium level of output. What variable does this relationship represent?

Income for open economy and calculate trade balance : Calculate the multiplier if the economy is closed and the multiplier if the economy opens up. Explain the economic intuition why two are different with 3-5 sentences. Solve for the equilibrium level of income (Y) for the open economy (Yopen) and calc..

What is the natural rate of unemployment : What is the natural rate of unemployment? Why might θ increase in this way? What will the inflation rate be in years t+5, t+6, and t+7.

In competitive industry with constant costs : In a competitive industry with constant costs, the long- run response to a change in market demand is

Warehouse needs pest treatment : A warehouse needs pest treatment that requires opening all the windows and covering the building with a tent for 48 hours. Opening the windows means deactivating the alarm system. The warehouse owner is concerned about theft during this time. Assume ..

Regression analysis between sales-social media advertising : Consider the following regression analysis between sales (Y in $100) and social media advertising (X in dollars): Yˆ = 5400 + 9X. The regression equation implies that an:

Derive the equation of the actual budget deficit : If G = 3800, Derive the equation of the actual budget deficit BDA as a function of t (tax rate). Find the tax rate at which the country will be running a budget balance. Find the values of the deficits for the following tax rates: 20%, 22%, 25%, 30%,..

Compute the amount of taxes at natural gdp : Compute the amount of taxes at natural GDP. Compute the N.E.D (Natural Employment Deficit/Surplus). Express as a percentage of the natural GDP (YN). Policymakers decide to reduce the size of the N.E.D (natural deficit) by 8% of the natural GDP. What ..

Where is the rejection region for the hypothesis test : If the alternate hypothesis states that µ (equal sign with a slash through it) /= 4,000, where is the rejection region for the hypothesis test?

User Account

All Pages