11-8:Suppose that a car rental agency offers insurance for aweek that will cost $10 per day. A minor fender benderwill cost $1500 while a major accident might cost$15000 in repairs. Without the insurance you wouldbe personally liable for any damages. What shouldyou do? Clearly there are two decision alternatives:take the insurance or do not take the insurance.Theuncertain consequences or events that might occurare that you would not be involved in an accident thatyou would be involved in a fender bender or that youwould be involved in a major accident. Assume thatyou researched insurance industry statistics and foundout that the probability of major accident is 0.05% andthat the probability of a fender bender is 0.16%. Whatis the expected value decision? Would you choose thisWhy or why not? What would be some alternate waysto evaluate risk 12-2: Suppose that the service rate to a waiting line system is 10 customers per hour (exponentially distributed).Analyze how the average waiting time is expected to change as the arrival rate varies from two to ten customers per hour (exponentially distributed).
