Operations Research208110 marksNumerical: Marginal analysis EVPIMarginal analysis approach
Cloud Storage Pricing and Demand Analysis A cloud services provider buys data storage at Rs. 20 per GB and sells it to clients at Rs. 25 per GB. Any unsold storage capacity is wasted. The daily demand for storage has the following probability distribution. If each day's demand is independent of the
Cloud Storage Pricing and Demand Analysis
A cloud services provider buys data storage at Rs. 20 per GB and sells it to clients at Rs. 25 per GB. Any unsold storage capacity is wasted. The daily demand for storage has the following probability distribution. If each day's demand is independent of the previous day, using the marginal analysis approach calculate the required measures.
| Demand (GB) | 46 | 48 | 50 | 52 | 54 | 56 | 58 | 60 | 62 | 64 |
|---|---|---|---|---|---|---|---|---|---|---|
| Probability | 0.01 | 0.03 | 0.06 | 0.10 | 0.20 | 0.25 | 0.15 | 0.10 | 0.05 | 0.05 |
(a) Calculate the maximum expected profit.
(b) Find the expected profit with perfect information (EPPI).
(c) Compute the expected value of perfect information (EVPI).
(d) What will be the maximum amount the cloud provider would be willing to pay for perfect and reliable information?
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- Cost price (CP): Rs. 20 per GB - Selling price (SP): Rs. 25 per GB - Marginal Profit (MP) per GB sold = $25 - 20 = 5$ - Marginal Loss (ML) per GB unsold = $20$ (cost wasted) Demand distribution: Demand 46 48 50 52 54 56 58 60 62 64 ------------------------------------------------ Prob 0.010.030...