Transworld Deliveries is expanding its contract home delivery service into the Northeastern United States. The company anticipates that to accommodate this expansion it will need between 25 and 40 staffed delivery vehicles. Transworld is currently moving 25 of its own vehicles, with drivers, into the Northeast. The daily cost of operating its own fleet is $820 per vehicle, while the daily cost of leasing a vehicle and driver is expected to be $1,200 per vehicle. The expected demand requirements follow: Requirements (in vehicles) 25 30 35 40 Probability 0.25 0.25 0.25 0.25 Using an expected value approach, should Transworld purchase additional vehicles and hire additional drivers? If so, how many would you recommend?
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